Rule 88C & Rule 88D - A Comprehensive Discussion

The differences between the liabilities declared in GSTR-1 and actual tax paid in GSTR-3B and the differences between ITC available as per GSTR-2B & ITC claimed in GSTR-3B are two core issues under GST. For handling such issues, the Central Government on the recommendations of the GST Council, had issued Rule 88C & 88D under CGST. In this article we will discuss about these rules, their implications and duties of taxpayers in this regard.

(A) Trigger point of Rule 88C (Difference between GSTR-1 & GSTR -3B):
Where the tax payable by a registered person, in accordance with the outward supplies furnished in FORM GSTR-1 exceeds the amount of tax paid by him in FORM GSTR-3B. Then the said registered person shall be intimated of such difference in Part A of FORM GST DRC-01B, electronically on the common portal, and a copy of such intimation shall also be sent to his e-mail, highlighting the said difference.

Taxpayer’s duties if Part A of FORM GST DRC-01B issued;
(a) Furnish a reply electronically on the common portal in Part B of FORM GST DRC-01B within 7 days and explain the reasons for the differential tax liability that has remained unpaid; OR
 (b) Pay the amount of the differential tax liability through FORM GST DRC-03 along with interest and furnish the details thereof in Part B of FORM GST DRC-01B electronically on the common portal within 7 days.

Reasons for short payment of GST in GSTR-3B as compared to GSTR-1.
 Followings are some reasons due to which there can be a short payment of tax in GSTR-3B;
(a) GSTR-1 was filed with incorrect details like wrong tax rates, etc. and due this the excess liability was reported in GSTR-1 but GSTR-3B was filed with correct figures and the GSTR-1 is to be amended in the next tax period.

Example: In November 2024, Mr. A has supplied a product the GST rate on which is 18% but Mr. A has charged 28% due to wrong classification and declare those supplies in GSTR-1 but while filing GSTR-3B the tax is deposited as per actual rate i.e., 18% and has to amend the said invoice in next month’s GSTR-1. In said situation there will be a mismatch in GSTR-1 & GSTR-3B of November 2024 as less tax is paid in GSTR-3B.

(b) Some transactions of earlier tax period which could not be declared in GSTR-1 of the said tax period but in respect of which tax has already been paid in FORM GSTR-3B of the said tax period and which have now been declared in GSTR-1 of the tax period under consideration.

Example: In the month of January 2025 the sale invoice number 18 was not declared in GSTR-1 due to error in auto population of data from e-invoice but while filing GSTR-3B of the January 2025 the GST was duly paid in respect of such invoice. Now, in February 2025 said invoice number is shown in GSTR-1 but not in GSTR-3B since the tax is already paid in GSTR-3B of January 2025

What if taxpayer neither furnished reply nor paid the differential amount;
If the taxpayer fails to pay said amount or no reply is furnished by him or his reply is not satisfactory then;

(B) Trigger point of Rule 88D (Difference in ITC as per GSTR-2B vs ITC claimed in GSTR-3B):

Where the amount of input tax credit availed by a registered person in FORM GSTR-3B exceeds the input tax credit available to such person in accordance with the auto-generated statement containing the details of input tax credit in FORM GSTR-2B. Then the said registered person shall be intimated of such difference in Part A of FORM GST DRC-01C, electronically on the common portal and a copy of such intimation shall also be sent to his e-mail address for highlighting the said differences.

Taxpayer’s duties if Part A of FORM GST DRC01C issued;
(a) Furnish a reply in Part B of FORM GST DRC-01C electronically on the common portal within 7 days and explain the reasons in respect of the amount of excess ITC OR
(b) Pay an amount equal to the excess ITC through FORM GST DRC-03 along with interest and furnish the details thereof in Part B of FORM GST DRC-01C, electronically on the common portal.

Reasons for excess claim of ITC in GSTR-3B as compared to GSTR-2B:

What if taxpayer neither furnished reply nor paid the differential amount;
If the taxpayer fails to pay said amount or no reply is furnished by him or his reply is not satisfactory then;

How the taxpayer can view the DRC01B & DRC01C:
Generally if any notice is issued to the taxpayer on the common portal then the same can be viewed by the taxpayer under the tab <<Services>> User Services>> View notices & Orders >> Additional notices & orders.

However in respect of DRC-01B & DRC-01C, it is important to note that there is a separate tab on the GST portal to view the DRC-01B & DRC-01C issued against him. Which can be viewed under the tab <<Services>>Returns>>Return Compliance.

Disclaimer: The information given in this article is solely for purpose of understanding the law. It is completely based on the interpretation of the author and cannot be constituted as a legal advise, the author of this article and Lawcrux team is not responsible for any legal issues if arises on the basis of the interpretation given above.