GST Section 74A: Show Cause Notices for FY 2024-25 Onwards

November 2, 2026

Until FY 2023-24, a GST demand for tax not paid, short paid, wrongly refunded or for input tax credit wrongly availed was raised under Section 73 (no fraud) or Section 74 (fraud, wilful misstatement or suppression of facts). For FY 2024-25 onwards, both situations are covered by a single provision, Section 74A of the CGST Act.

Where Section 74A comes from

Section 74A was inserted by the Finance (No. 2) Act, 2024 and came into force on 1 November 2024. It applies to tax for FY 2024-25 and later years. Demands for FY 2017-18 to FY 2023-24 continue under Sections 73 and 74.

No notice can be issued under Section 74A where the tax involved is less than ₹1,000 (proviso to Section 74A(1)).

One time limit

  • Show cause notice: within 42 months from the due date for furnishing the annual return for the financial year (or from the date of an erroneous refund).
  • Order: within 12 months from the date of the notice. A senior officer can extend this by up to six months.

Example: if the annual return for FY 2024-25 was due on 31 December 2025, the notice must be issued by 30 June 2029.

Under the old sections, the time limits for fraud and non-fraud cases were different. Under Section 74A they are the same, so the fraud allegation no longer decides whether the notice is in time.

Penalty: fraud still matters

The penalty still depends on whether fraud, wilful misstatement or suppression is alleged and proved:

  • No fraud: 10% of the tax or ₹10,000, whichever is higher. No penalty if tax and interest are paid before the notice, or within 60 days of the notice.
  • Fraud, misstatement or suppression: penalty equal to the tax. It reduces to 15% of the tax if paid before the notice, 25% if paid within 60 days of the notice, and 50% if paid within 60 days of the order.

The 60-day windows are longer than the 30 days that applied under Sections 73 and 74.

What to check in a Section 74A notice

  1. The period. Section 74A applies only to FY 2024-25 onwards. A notice for an earlier year must be under Section 73 or 74.
  2. Time limit. Count 42 months from the due date of the annual return for that year.
  3. The fraud allegation. If the notice proposes the higher penalty, it must state the specific facts that amount to fraud, wilful misstatement or suppression. A general statement is not enough, and the case can be argued for the lower penalty.
  4. Relied-upon documents. Ask for any document the notice relies on but did not attach.
  5. Whether a pre-notice intimation was issued. The officer may first send an intimation in Form DRC-01A. If you received one, check what was paid or said in reply.

Replying

The reply is filed in Form DRC-06 on the GST portal, usually within 30 days. Answer each allegation with facts and documents, raise limitation and the absence of fraud where relevant, and ask for a personal hearing. Where part of the demand is accepted, paying that part with interest through DRC-03 within 60 days of the notice can avoid or reduce penalty on it.

This article is general information as on the date of publication, not advice on any particular case. The law and its interpretation change; check the current position before acting.

Official sources