GST DRC-01A: Why You Should Reply Before the Show Cause Notice

November 2, 2026

Before issuing a GST show cause notice, the proper officer may first send an intimation in Form GST DRC-01A. It sets out the tax, interest and penalty the officer has worked out. Many taxpayers ignore it because it is not yet a demand. That is often a missed opportunity: this is the cheapest stage at which to settle or explain the matter.

What the law says

Rule 142(1A) of the CGST Rules allows the officer, before serving a notice under Section 73(1), 74(1) or 74A(1), to communicate the ascertained tax, interest and penalty in Part A of Form DRC-01A. The words “shall communicate” were changed to “may” in October 2020, so the intimation is no longer issued in every case. Section 74A was added to the rule from 1 November 2024. Some High Courts have held that the intimation still matters where the law gives the taxpayer a right to pay before the notice; that question depends on the facts and the period.

Your options when you receive DRC-01A

  1. Accept and pay. Pay the amount, fully or in part, through Form DRC-03 and inform the officer in Part B of DRC-01A. For non-fraud cases, paying tax and interest before the notice means no penalty on that amount. For cases alleging fraud or suppression, the penalty at this stage is 15% of the tax.
  2. Explain. File submissions in Part B showing why the amount is not payable, with documents. Common examples are ITC supported by supplier invoices and payment, timing differences between GSTR-1 and GSTR-3B, and credit notes not considered.
  3. Both. Pay what is genuinely due and explain the rest.

If the officer accepts the payment or the submissions, an intimation can be issued in Part C of DRC-01A, and no show cause notice follows for that amount.

Why reply at this stage

  • The officer is still working out the amount and can correct it without a formal order.
  • A penalty can be avoided or kept to the minimum.
  • Your reply is on record. If a show cause notice follows, it should deal with what you said.
  • It costs far less time than a show cause notice, an order and an appeal.

How to prepare the reply

  1. Reconcile each item in Part A with your returns (GSTR-1, GSTR-3B, GSTR-2B and GSTR-9) and books.
  2. Separate genuine short payments from data errors and timing differences.
  3. Collect evidence: invoices, e-way bills, payment proofs, supplier confirmations and credit notes.
  4. Pay what is due through DRC-03, quoting the correct period and reason.
  5. File Part B on the portal with a short, item-wise explanation and annexures, before the date given in the intimation.

If you did not reply in time

A show cause notice in Form DRC-01 will usually follow. You can still pay tax and interest within the time allowed after the notice to limit penalty, and you must file a full reply in Form DRC-06. See our page on DRC-01A intimations and on show cause notices under Sections 73, 74 and 74A.

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