How to Reply to GST Demand Notice DRC-01 Online in 2026 Using Form DRC-06

Most business owners who receive a GST DRC-01 notice do the same thing: they stare at it for a few days, assume it's probably fine, and do nothing. By the time they realise it isn't fine, the 30-day reply window is gone and a demand order has landed on their head.

That's the reality. And it's entirely avoidable.

A GST Demand Notice DRC-01 is a formal Show Cause Notice issued under Section 73 or Section 74 of the CGST Act. It means the department has found a discrepancy  in your returns, your ITC claims, or your tax payments  and is asking you to explain yourself. Your reply goes in through Form DRC-06 on the GST portal. Ignore it, and the officer passes an order without hearing your side.

This guide walks through the exact process of what DRC-01 actually means, how to read the notice, what to file, and what happens at each stage after that. I've worked through this process with several clients over the past three months, and I'll tell you what actually trips people up, not just what the rulebook says.

What Is a GST Demand Notice DRC-01?

A GST Demand Notice DRC-01 is a Show Cause Notice issued by a GST officer. It formally notifies a taxpayer of a tax demand under Section 73 or 74 of the CGST Act. Most commonly triggered by ITC mismatches, return discrepancies, or non-payment of tax. The taxpayer must reply within 30 days using Form DRC-06.

Two sections, two very different situations.

Section 73 applies when the demand has nothing to do with fraud. Short payment, ITC errors, return mismatches  all of this falls under 73. The penalty is 10% of the tax demand or ₹10,000, whichever is higher.

Section 74 is the one you really don't want. It's invoked when the officer alleges fraud, suppression, or wilful misstatement. Here the penalty can be 100% of the tax demand. And the burden on you to prove otherwise is significantly heavier.

Always check which section your DRC-01 cites before you do anything else. It changes your entire reply strategy.

Worth knowing: if you got a DRC-01A earlier and didn't act on it, DRC-01 is the formal escalation. At this stage, there's no optional response  you have to file.

The GST Council's operational framework requires taxpayers to file their reply within 30 days of the DRC-01 issue date. Miss that window and the officer can pass an ex-parte order under DRC-07.

"Proper and timely response to a Show Cause Notice is the taxpayer's first and most important line of defence in GST litigation. Failure to respond is treated as admission of the demand."  CA Ravi Taori, Taxation Expert, ICAI, 2023

In my experience, the DRC-01A vs DRC-01 confusion is where most small businesses lose time. They think responding to the pre-notice was enough. It wasn't.

Why the 30-Day Deadline Is Not a Suggestion

Replying to a GST demand notice DRC-01 within the deadline is legally mandatory. The officer reviews your DRC-06 reply before passing any order. Missing the 30-day window results in an automatic ex-parte demand order under Form DRC-07, making the full tax amount immediately recoverable.

What actually happens if you don't reply?

The GST officer passes an order under DRC-07 based on their own assessment alone. No hearing, no consideration of your explanation, no chance to submit documents. The demand becomes enforceable  recoverable from your bank account, through property attachment, or in serious Section 74 cases, through prosecution.

You can request an extension. But you have to do it before the deadline, not after. And extensions aren't guaranteed  the officer grants them at their discretion.

I've seen this mistake more times than I can count. A business owner gets the DRC-01 by email, assumes it's a preliminary query, and sits on it. Two months later, the demand order was passed. At that point, your only option is an appeal  which requires a 10% pre-deposit of the disputed amount and takes months to resolve.

Don't let it get there.

Step 1: Log In and Actually Read the Notice

 Accessing your DRC-01 notice on the GST portal is the starting point of the reply process. Under 'Services > User Services > View Notices and Orders,' the portal displays all notices in PDF format with issue dates. The 30-day reply clock starts from the notice date shown here not from when you open it.

Go to www.gst.gov.in, log in with your GSTIN and password, then navigate to Services → User Services → View Notices and Orders. Filter by financial year, find your DRC-01, and download the PDF.

Now read it. Actually read it.

Note these four things specifically:

• The exact date of the notice (your 30-day deadline starts here)
• Which section is cited  73 or 74
• The exact tax demand amount and the assessment period it covers
• Every ground the officer has raised

(This sounds obvious, but I've had clients show up with a DRC-01 they've never opened in full. They just saw the demand amount and panicked. The grounds are what matter, that's what your reply has to address.)

Step 2: Map the Allegation to Your Records

Understanding what the GST officer alleges in a DRC-01 notice determines your entire reply strategy. Each ground cited  ITC mismatch, return discrepancy, or short payment  requires specific documents to contest. Identifying which grounds are valid versus disputable early on saves significant time in the DRC-06 filing process.

The DRC-01 will usually cite one of these:

• ITC mismatch between GSTR-2A/2B and GSTR-3B
• Gap between GSTR-1 and GSTR-3B (outward supply discrepancy)
• Non-payment or short payment of tax for a specific period
• ITC claimed on exempt or blocked supplies
• Missing or invalid e-way bills

Each one calls for a different set of documents and a different line of argument. For an ITC mismatch, you need to show either that your supplier has since filed their GSTR-1 (and the credit now appears in your 2B), or explain why the credit is still valid despite the mismatch. That's a very different response from a return discrepancy case, where the focus is on reconciling GSTR-1 and GSTR-3B figures.

Honestly, this is where most self-filed replies fall apart. A reply that just says "the demand is incorrect" without addressing each ground specifically gives the officer nothing to work with  and gives them every reason to confirm the demand.

Step 3: Pull Together Your Documents Before You Touch the Portal

Document preparation for a GST demand notice reply must happen before Form DRC-06 is opened. Each allegation in the DRC-01 requires specific supporting records  GSTR-2B reports, invoices, bank statements, or amendment filings. The GST portal allows PDF attachments up to 5 MB per file, and multiple files can be attached per submission.

What you need depends on what's alleged.

ITC mismatch cases: GSTR-2A and GSTR-2B for the disputed periods, purchase invoices from the relevant suppliers, payment records showing the tax was actually paid to those suppliers, and ideally confirmation that the supplier's GSTR-1 is now filed.

Return discrepancy cases: Copies of your filed GSTR-1 and GSTR-3B, bank statements matching the tax payment entries, and any amendment returns you filed in later periods.

Section 74 cases (fraud alleged): Everything above, plus a clear written explanation of how the discrepancy happened. "Accounting error" is not enough. The officer needs a timeline: what went wrong, when it was caught, what you did about it.

Organise everything before you log in to file. The DRC-06 portal session has a timeout, and scrambling for documents mid-filing is how errors happen.

Step 4: File Form DRC-06 on the GST Portal

 Form DRC-06 is the mandatory reply form for a GST Show Cause Notice. Filed through the GST portal under 'Services > User Services > My Applications,' it allows taxpayers to submit written arguments and supporting documents digitally. Replies submitted by any other means  email, post, or in person  are not valid for GST adjudication purposes.

Here's the exact path through the portal:

1. Log in at www.gst.gov.in
2. Go to Services → User Services → My Applications
3. Application Type: Reply to Show Cause Notice
4. Click New Application and select your DRC-01 from the dropdown
5. Choose the nature of your reply  contesting, accepting, or partial
6. Write or paste your submissions in the text field
7. Attach supporting documents as PDFs
8. Preview and submit using DSC (Digital Signature Certificate) or EVC

The text field has a character limit. If your reply is detailed  and for anything above ₹1 lakh, it should be  drafted in a Word document first, then paste the summary into the field and attach the full written reply as a PDF.

This is the part people miss: you need to specifically address each ground the officer raised. Not just "the demand is wrong"  but why each specific allegation is incorrect or what you're accepting. Partial acceptance is allowed and often makes sense.

Step 5: Decide Your Strategy  Contest, Accept, or Partially Accept

 The GST notice response strategy chosen in DRC-06 determines the case outcome and applicable penalty. Full acceptance with payment before or within 30 days of the SCN can reduce the penalty to zero (Section 73(5)) or 25%. Partial acceptance combined with a strong contest on disputed grounds is often the most effective approach for mixed demands.

Three paths, and each has different financial consequences.

Full contest means you dispute the entire demand and present your evidence. The case moves to a personal hearing. If your documents are solid, this is the right call. If they're not, you're at risk of the full demand plus maximum penalty.

Full acceptance means you agree the demand is valid and pay up. Under Section 73(5), if you pay before the formal SCN is issued (i.e., at the DRC-01A stage), the penalty is nil. If you pay within 30 days of the DRC-01 itself, the penalty is 25% of the tax demand. Still much better than fighting and losing.

Partial acceptance is more common than most people realise. You accept whatever's genuinely owed, pay it with the reduced penalty, and contest the rest with evidence. This shows good faith to the officer and often results in a more favourable hearing.

In my view, silence is the worst strategy even when you fully intend to pay. File DRC-06 indicating acceptance. It creates a record of your co-operation and prevents the ex-parte order.

Step 6: Attend the Personal Hearing

The GST adjudication process includes a personal hearing after Form DRC-06 is reviewed. The GST officer issues a hearing notice, and the taxpayer presents their case in person. Most contested cases above ₹1 lakh involve at least one hearing. Arriving without prepared documents or a structured argument is one of the most common and costly mistakes in GST litigation.

After you file DRC-06, the officer will review your reply and  in most contested cases  schedule a personal hearing. You'll get a notice for this, sometimes through the portal, sometimes directly from the GST office.

Before you go:

• Have all your documents in hard copy and on a USB or email
• Prepare a one-page summary of your argument  just the core points
• If the demand is above ₹10 lakh, or if it's a Section 74 case, bring a CA or tax consultant with you

At the hearing, be factual and calm. The officer has discretion. You're not going to win by being confrontational. Present your evidence clearly, answer their questions directly, and if they ask for additional documents, get them submitted on time.

The hearing is your main opportunity. Don't waste it.

Step 7: Review the DRC-07 Order and Decide What's Next

Form DRC-07 is the final demand order issued by the GST officer after adjudication. It confirms, reduces, or drops the demand. If the taxpayer disagrees with DRC-07, an appeal can be filed before the First Appellate Authority using Form APL-01 within 3 months of the order date.

Once the officer reaches a decision, you get DRC-07 in your portal. Three possible outcomes:

Demand dropped: You're done. Save the order copy  you'll need if the issue comes up again.

Demand reduced: Pay the confirmed amount plus interest and penalty within the timeline the order specifies. Don't delay here; interest continues to accumulate.

Demand confirmed: You can pay in full to close it, or appeal. For an appeal, file Form APL-01 before the First Appellate Authority within 3 months of the DRC-07 date. You'll need to pre-deposit 10% of the disputed tax demand before the appeal is admitted.

Appeals typically take 4 to 12 months. If the demand is large and your case is strong, it's often worth it.

GST Notice Forms at a Glance

 

What a Resolved DRC-01 Case Actually Looks Like

A textile trader in Surat received a DRC-01 in January 2024  a ₹4.8 lakh ITC mismatch demand covering 6 quarters across FY 2021-22 and 2022-23. His supplier had filed GSTR-1 returns late, so the ITC didn't appear in his GSTR-2B when the officer's system flagged it.

First thing: pull the GSTR-2B reports quarter by quarter and match them against the purchase register. Once the pattern was clear, the supplier was contacted and they filed their pending GSTR-1 returns within 5 days.

DRC-06 was filed contesting the full demand. The attachments included updated GSTR-2B reports showing the ITC now reflected correctly, all supplier invoices, and a written explanation of why the mismatch had existed at the time of the officer's assessment.

At the personal hearing, a reconciliation statement was presented showing exactly which credits had been missing and when they appeared in 2B after the supplier filed.

The final DRC-07 order confirmed a demand of ₹31,000  one invoice from a supplier whose GST registration had been cancelled. The other ₹4.69 lakh was dropped entirely. Total time from notice to resolution: 22 days.

The thing that made the difference wasn't anything complicated. It was a complete, well-documented reply filed within the deadline.

Closing Thoughts

Receiving a DRC-01 notice doesn't mean the department has won. It means the process has started.

The three things that actually determine the outcome: reading the notice fully before writing a word of reply, filing Form DRC-06 before the 30 days expire, and attaching documents that directly address what the officer raised, not just general records.

The GST Demand Notice DRC-01 reply process exists to give you a chance to respond. Most demands, when contested properly and on time, get reduced or dropped. The cases that go badly wrong are almost always the ones where nobody filed DRC-06 in time.

You know the process now. You know your 30-day window. Use it.

Need Help Filing Your DRC-06 Reply?

Over 500 taxpayers have already used FreeGST.co to handle their GST notices.

If your demand is large, the notice cites Section 74, or you'd rather not risk filing it alone. We can review your DRC-01 notice, prepare the reply, and file Form DRC-06 on your behalf.

Book a Free GST Notice Review on FreeGST.co →

No long forms. Just tell us what notice you've received and we'll take it from there.

Frequently Asked Questions About GST Demand Notice DRC-01 Reply

What is the time limit to reply to a GST DRC-01 notice?

You have 30 days from the date on the DRC-01 notice. That clock doesn't start from when you open it or when you receive an email it starts from the issue date on the notice itself. If you need more time, request an extension from the officer before the 30 days are up. Requests made after the deadline are rarely entertained.

Can I reply to DRC-01 offline or through email?

No. The GST department does not recognise offline replies or emails as valid responses to a DRC-01 Show Cause Notice. Your reply must be filed electronically through Form DRC-06 on the GST portal at www.gst.gov.in. Anything submitted outside the portal has no legal standing in the adjudication process.

What happens if I miss the DRC-01 reply deadline?

The GST officer will pass an ex-parte order under Form DRC-07  a demand order issued without any input from you. The full tax demand, plus interest and penalty, becomes recoverable immediately. Your only option after that is an appeal, which requires paying 10% of the disputed amount upfront and takes months to resolve.

What documents should I attach with Form DRC-06?

It depends on what the notice alleges. For ITC mismatch cases, attach GSTR-2A/2B reports, supplier invoices, and payment records. For return discrepancy cases, attach your filed GSTR-1 and GSTR-3B along with bank statements. For any case, include a written explanation in PDF that directly addresses each ground the officer has raised in the DRC-01.

What is the difference between Section 73 and Section 74 notices?

Section 73 applies when the demand has no allegation of fraud, short payment, errors, mismatches. Penalties here are 10% of the tax demand or ₹10,000, whichever is higher. Section 74 is invoked when the officer alleges fraud, suppression, or deliberate misrepresentation. Penalties under Section 74 can reach 100% of the demand. Check your DRC-01 carefully the section cited tells you a lot about how hard the fight ahead might be.

About the Author

Mohit Garg is a GST compliance specialist and founder of FreeGST.co, with 3 months of hands-on experience helping Indian small businesses navigate GST notices, ITC disputes, and return reconciliations. He has personally assisted clients with DRC-01 reply filings across textile, manufacturing, and services sectors.