How to File DRC-03 in GST Portal?

12 August 2024

31,717 5 mins read

Following is a detailed guide to understanding how to file a DRC-03 form under the GST Act and the circumstances that may arise when you should use this form.

Table of Contents

DRC-03 is a form used to file voluntary tax payments as defined by the GST law of the country. It is done when the government discovers a demand or deficiency of taxation after the deadline for filing tax returns for a financial year has passed.

The DRC full form in GST is called the ‘Demand and Recovery Forms’. There are times when one might discover that they have not reported their income correctly or might have missed out on something while filing GST returns. In such cases, businesses or individuals eligible for GST return filing can use the DRC-03 form to make a voluntary payment.

The DRC 03 form can also be filled in case you have already filed a GST return but need to correct it. It can be due to many cases such as incorrect calculation, misreporting, or underreporting of income.

When Should You Use DRC-03 to Make Payment?

Here is a rundown of the different instances when you should make payment through DRC-03:

Audit/Reconciliation Statement: The most common reason for making payment through DRC-03 is when an auditor of GST finds out you have been underpaying your taxes, interests, or penalties.
A similar situation can also arise if the auditor discovers you have claimed more input in your tax credit than you were entitled to (for the year being reviewed) and the total time for declaring the mistake in the returns of GST has already passed. If either of these happens, you should make a payment voluntarily through the DRC-03 Form (& report the same in GSTR-9).
Investigation: If an income taxpayer is under criminal inspection and it turns out they have failed to make tax payments that they should have, a voluntary tax payment through DRC-03 is needed to solve the problem.
Annual Returns: It is standard practice for taxpayers to reconcile their accounts and finances for the year before filing their yearly returns. Suppose you discover that you have made short taxes or interest payments or have failed to pay penalties for misreporting of taxable supplies. In that case, you can choose to make up for the tax disparity through a voluntary tax payment using DRC-03.

You can also use DRC-03 to correct errors in the computation of taxes or to pay additional taxes due to changes in your monetary circumstances.

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Mismatch of Liability – GSTR 1 – GSTR 3B: Included in the list of reasons for DRC 03 forms to be used on February 21, this option allows you to pay tax liability shortfalls through the form of DRC 03. For example, if you have received a notice about your GSTR 3B not matching up with your GSTR 1, you are eligible to recompense the difference through a DRC 03 form (or justify why there is a disparity).
In response to a show cause notice: If faced with such a notice, a taxpayer can pay the required tax (plus interest) using a DRC-03 form. However, note that it must be paid within a calendar month (30 days) of the notice’s first issued.

For instance, if you receive a notice in October and pay by November, it will be considered paid within the required month. However, if you wait till December to make the payment, it will not be considered as such (and instead treated like any other tax payment).

Mismatch of ITC – GSTR 2A/2B – GSTR 3B: Another reason for using DRC-03 is when a taxpayer receives a notification that they have claimed an excess tax credit inputs in their GSTR-3B compared to their GSTR-2B. The form will be used when the taxpayer is depositing surplus ITC claims.

Prerequisites To Keep In Mind Before Filing Form DRC-03

A DRC-03 Form used to pay taxes voluntarily or involuntarily can be used in these circumstances:

Anytime before the issuance of the show cause notice
Anytime within the month of the issuance of the show cause notice

Ways to File a DRC-03 Form

Log in to the GST portal online, navigate to the ‘User Services’ section, and then click on ‘My Applications’.
Pick one of three possible scenarios for which you need to make your payment:

Scenario 1: The taxpayer did not make payments & doesn’t have a PRN.

The steps for case 1 are as follows:

You need to click on ‘Intimation of Voluntary payment – DR-03’ under ‘Application Type’, and select ‘New Application’.
Whether paying due to an SCN or voluntarily, a taxpayer has two options here:

SCN Payment: For this, manually enter your SCN Number. After this step is done, you need to pick a date of issuance within 30 days from the date of payment.
Voluntary payment: The date will be auto-populated, with no way to change it.

Pick the right Section to make your payment, the fiscal year of the payment, and the from and to dates of the tax period.
At this point, add the payment information along with penalties and interests. You can add more info by clicking ‘Add’. When you are done, click on ‘Continue to Pay’.
Fill in the required details on the voluntary page for payment. There are three sections: ‘ Cash Ledger Balance’, ‘Liability Details’, and ‘Credit Ledger Balance’.
When the confirmation message displays the amount of cash and ITC used to make the payment, click ‘OK’ to create a PRN along with a payment success message.

Scenario 2: A taxpayer has a PRN but has not used it and requests payment within half an hour of the PRN generation.

The steps that should be taken for scenario 2 are as follows:

Select ‘Intimation of Voluntary payment – DR-03’ under ‘Application Type’, and select ‘New Application’
Under the option of ‘Have You Made Payment?’, select ‘Yes’, and fill in your PRN
There will be a link saying ‘get payment details’. Click on it, and the data will auto-populate as per the payment made
Pick the ‘Preview’ option for viewing the draught DRC-03, and then apply normally.

Scenario 3: A taxpayer has generated PRN but has not used it and requests payment 30 minutes after PRN generation.

The steps that should be taken for scenario 3 are as follows:

Select ‘Intimation of Voluntary payment – DR-03’ under ‘Application Type’, and select ‘New Application’.
Click on the ‘Have You Made Payment?’ section and fill in the PRN.
You will have to manually enter the info on the ‘get payment details’ link, as this time it will not auto-populate. It is due to the expiration of the half an hour timer.
After that, apply per usual methods.

What Happens After You File A DRC-03?

After you file your DRC-03, the status of the submitted application turns to “Pending Tax Officer Approval”. If everything has been filed correctly, you will receive a GST form DRC-04 from the tax officer. This is an acknowledgment of acceptance of the Voluntary Payment form.

Conclusion

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