Form GST DRC-01A: Intimation of Tax Ascertained Payable
- Farheen Mukadam
- Sep 10
- 7 min read
The goal of the introduction of the GST in India was to simplify the nation's indirect tax structure. Its objectives were to monitor and prevent tax evasion, simplify compliance, and relieve consumers of the burden of several taxes. The authorities have adopted a number of measures, including stringent enforcement, to curb the problem of fraudulent invoicing. The action was conducted in order to investigate fraudulent activity. In this context, the GST council has implemented a new feature that notifies taxpayers in the event that there is a difference in their tax payments on Form GST DRC-01. With the notification, the taxpayer can evade examination and pay or explain the difference within the allotted time frame without the help of tax authorities.
Table of Contents
What is Form GST DRC-01A?
Assume that a person is subject to tax, interest, and penalties under section 73 or section 74 of the CGST Act, subsection (1). In that scenario, the appropriate officer will then have to provide the tax, interest, and penalty data, as determined by him, in Part A of Form GST DRC-01A. Section 73 addresses situations in which taxes are not paid or are paid insufficiently without any fraudulent intent or conduct. Section 74 addresses situations in which taxes are not paid or are paid insufficiently with the aim of committing fraud.
Purpose of Issuing Form GST DRC-01A
According to the GST Rules, the appropriate official was required to provide a summary in Form GST DRC-01 or Form GST DRC-02, depending on the situation, detailing the specifics of the tax owed when serving a notice or statement. But now that this new sub-rule has been added, the taxpayer must be informed of the tax, interest, and penalty that must be paid before the notice or statement is served. Therefore, it is not a show-cause notice but rather an indication.
Components of Form GST DRC-01A
A pre-show-cause notice known as FORM GST DRC-01A is sent out in accordance with CGST Act Sections 73 or 74. It is issued when the tax officer suspects that there are inaccurate Input Tax Credit (ITC) claims or unpaid or underpaid taxes. There are two sections to the form: Part A and Part B. The taxpayer is notified of their liabilities in Part A, and they have the option to respond or make a voluntary payment in Part B.
Intimation of Tax Ascertained through Part A of GST Form DRC-01A
The following modifications have been made to Rule 142, which deals with notice of demand under GST, in accordance with the Central Tax notification no. 49/2019, issued October 9, 2019:
Notification and directive for the demand of sums due under the act: In addition to i) the notice issued under Sections 52, 73, 74, 76, 122 to 125, Sections 127, 129, and 130, the appropriate official must electronically serve a summary of the notice in GST DRC-01.
The responsible officer must convey the details of any tax, interest, or penalty that they have determined in Part A of GST DRC-01A before issuing the notice that is charged with interest, tax, and penalty under (1) of Section 73 or (1) of Section 74.
Statement under (3) of Section 74, an electronic summary of which is available in GST DRC-02, detailing the specifics of the amount owed, or
If the person charged with taxes pays the tax and interest in accordance with Section 74(5) before the notice or statement is served, or if someone else pays the tax, interest, penalty, or any other amount owed in accordance with the act's provisions, either on their own initiative or in response to a communication from the concerned officer under Subrule 1(A), they must notify the officer in GST DRC-03 and the concerned officer must acknowledge receipt of the payment in GST DRC-04.
The person mentioned in subrule 1(A) may submit a reply against the proposed liability in Part B of GST DRC-01A if he has partially paid the amount sent to him or if he desires to do so.
Latest Updates
December 21, 2021
Multiple people may receive notice under section 74 from the officer for fraudulently filed tax shortfall or excess ITC claims. It has been changed to allow officers to confiscate and seize cars or goods even after procedures against all parties liable to pay specific or general penalties have concluded.
Union Budget 2021 Outcome as of February 1, 2021
The recovery of taxes under Section 74 is not the same as the seizure and confiscation of goods and vehicles while they are en route.
The outgoing supplies and sales that are reported in the GSTR-1 under Section 37 of the CGST Act but that are omitted when reporting in the GSTR-3B under Section 39 would also be covered by the self-assessed tax mentioned in Section 75 of the CGST Act.
Responding to a Notice on Form DRC-01A
The process of responding to a notice on Form DRC-01A is as follows:
Utilising Form DRC-01A, Part B
Effective use of the designated sections is essential for a taxpayer to participate in the process after receiving a notice in Form DRC-01A. The form's Part B gives the taxpayer a way to provide particular information:
Part-Payment Information: Part B should explicitly state if the taxpayer has paid a portion of the determined obligation. Transparency in the process is ensured by giving precise and thorough information about the payment made.
Contesting Liability: It should also be mentioned in Part B if the taxpayer feels that the responsibility determined in the notification is inappropriate. Effectively addressing the issues will be facilitated by providing a clear explanation of the grounds for contesting liability.
Making Submissions
Any other submissions or clarifications the taxpayer may have regarding the notice may be sent in writing. To bolster their argument, the taxpayer may include supplemental documentation or write a thorough rebuttal.
Key Considerations When Responding to Form DRC-01A
Verify that all of the data in Part B is correct and understandable. This contains information about any payments paid as well as the justifications for denying liability.
Comply with the notice's deadlines for responses. Prompt communication shows collaboration and could help the settlement process.
The response should be accompanied by any supporting documentation or evidence that is pertinent to the taxpayer's argument. The taxpayer's perspective gains credibility as a result.
It may be helpful to seek expert counsel or assistance in complex circumstances. Tax professionals or advisors can guide you through the process and offer advice on how to respond.
Conclusion
GST DRC-01A is a notification of tax liability resulting from underpaid taxes, unpaid taxes, or incorrectly declared input tax credits. Part A of the notification displays the GST demand. The taxpayer has two options: either agree to the computation and pay the tax, or respond by stating that he disagrees with the Part B demand. The GST DRC-01 notification offers the choice to settle the disagreement by a tax deposit or through legal action. The purpose of this regulation was to provide the dealer a pre-show cause notice period to check his own records and either confirm or deny liability. It is intended to lower litigation and benefit the department as well as the taxpayer.
Frequently Asked Questions
What is GST DRC-01?
Form GST DRC-01A is an intimation sent out prior to the show cause notice, whereas GST DRC-01 is a summary of the show cause notice given to a taxpayer. The taxpayer can pay the responsibility using Part B of the form if he agrees with the department's demand, or he can use Part B of the form to respond with clarifications if he disagrees with the department's claim. A show-cause notice will be delivered, and recovery actions will be taken against the taxpayer if he does not respond or pay.
When and why is Form GST DRC-01A issued?
When the tax authorities conclude that the taxpayer is required to pay tax, interest, or a penalty under sections 73 or 74 of the CGST Act, they issue FORM DRC-01 in GST. In this way, it is not possible to issue a show-cause as a prelude before any official show-cause notice or demand has ever been served. By notifying the taxpayer of the unpaid tax, interest, and penalties, this form allows them to review and settle the issue before more drastic action is taken. It acts as a warning and gives the taxpayer the opportunity to make amends and stop more negative outcomes.
What is a show cause notice in GST?
A taxpayer may receive a show-cause letter from the GST officer if they have unpaid or underpaid taxes, incorrectly returned taxes, or improperly claimed or used input tax credits. He shall provide a summary of the show cause notice in Form DRC-01 along with the show cause notice, which will include the following information:
Information on the recipient of the show-cause notice, such as address, GSTIN, etc.
Financial year, tax period, section reference, and notification reference
A summary of the case's facts and foundations
Taxes and other obligations, such as interest and penalties, among others
What is the difference between GST DRC 01 and GST DRC-01 A?
Form GST DRC-01A is an intimation sent out prior to the show cause notice, whereas GST DRC-01 is a summary of the show cause notice given to a taxpayer. The taxpayer can pay the responsibility using Part B of the form if he agrees with the department's demand, or he can use Part B of the form to respond with clarifications if he disagrees with the department's claim. A show-cause notice will be delivered, and recovery actions will be taken against the taxpayer if he does not respond or pay.
What is the consequence of non-compliance with GST DRC-01A?
A formal show-cause notice (DRC-01) and possible penalties under GST legislation are just two of the severe repercussions that may result from failing to complete FORM GST DRC-01A. If the taxpayer doesn't reply or pay within the allotted time, the tax authority may start recovery proceedings. This may have an effect on how businesses operate, prevent ITC claims, or result in interest charges. Businesses should maintain audit-ready records, reconcile GST data on a regular basis, and respond quickly to warnings in order to stay safe.
Is payment mandatory after receiving Form GST DRC-01A?
No, it is not required to pay. You have two options: either pay the requested tax or respond with a justification for your disagreement. Before making a final decision, the tax officer will examine your response.
Can I get input tax credit (ITC) if Form GST DRC-01A is issued?
Yes, even if you receive a DRC-01A, you are still eligible to claim your ITC. However, be sure that no fake invoices are used and that your returns are accurate. During verification, the officer could look over your ITC claim.
