The DRC03 form facilitates a taxpayer to make voluntary tax payments or in case of a show-cause notice (SCN) issued by the GST department.
Following are some of the scenarios in which a taxpayer needs to use DRC03:
- Annual return: In this case, it is required that you conduct reconciliation for the whole year and then prepare and file your returns. If during such reconciliation in case of certain discoveries taxpayers are permitted to pay the difference in cash by filing a DRC03 form. Some such discoveries include:
- Short payment of taxes,
- Short payment of interest
- Short payment of penalties
- Underreporting of taxable supplies
- Liability mismatch: In case of a deficit in tax liability between GSTR-3B and GSTR-1, you are required to pay the shortfall through DCR03 or you can explain the reasons for the deficit. This option was recently added to the GST portal in the year 2021
- Audit statement: You as a taxpayer would need to make a voluntary payment through DRC-03 and report it in GSTR-9 if the GST auditor discovers any of the following when auditing a financial year:
- Short payment of taxes
- Interest or penalties
- The increased claim of the input tax credit
- The time limit to include all of it in GST returns has expired
- ITC mismatch: In case of excess tax credit(ITC) (excess means more than what’s permitted by CGST) you may get a notice from the authorities. In such a scenario you would need to use the DRC-03 form for depositing the claims of ITC. The estimation of whether the ITC is in excess or not is done by comparing the claims between GSTR-3B and GSTR-2B.
- In response to a show-cause notice (SCN): In the case of show-cause notice, you can make the payment within 30 days from the notice’s issue date. The tax and the interest demanded by the SCN notice has to be made using the DRC-03 form.
- Investigation: During an investigation, if it’s revealed that there has been a default in tax payment or the incorrect amount has been paid, you can voluntarily pay via the DRC-03 form
A voluntary payment using DRC-03 payment could be made:
- Before a show cause notice is issued
- 30 days from the issue of SCN
Step by step guide to filing the DRC-03 form:
- Login to GST portal
- Navigate to User services under my applications
- Select the application type
- Choose either of the two:
- Voluntary payment
- Payment against SCN
- Choose the appropriate section that applies to you and the financial year and the corresponding dates
- Enter the details that will come in the voluntary payment page
- You will get a confirmation message.
Once you file in the DRC-03 form the status of filing will become ‘Pending for approval by tax officer’. As a taxpayer, you will get a notice of acknowledgement of acceptance of voluntary payment that is from the tax office in the form of GST DRC-04. Even if a payment is waiting for approval you can make another payment using voluntary payment.
You can click here to know about the turnover limit of GST. However, to give you a quick idea as per the decision of a recent GST council meeting the turnover limit for GSTR-9 being optional is Rs 2 crore and if the turnover is between 2 to 5 crores then the GSTR-9C can be self-certified. Detailed analysis of how this affects the DRC-03 form applicability is available here.