GST DRC-01 show cause notice: section 73, 74 or 74A, and how to reply
A DRC-01 is the summary of a GST demand notice. Which section it is under decides the time limits and how much penalty you can avoid by paying early.
Reviewed by Vijay Dhawan, Managing Partner, LexVerge LLP, on · Published
Quick answer
A DRC-01 is the summary of a show cause notice demanding tax, interest and penalty. For periods up to 2023-24 it is under section 73 (no fraud) or section 74 (fraud or suppression); for 2024-25 onward both are replaced by section 74A. Reply in DRC-06 with a point-wise answer and ask for a hearing. Paying tax and interest early cuts or removes the penalty: under section 74A, paying within 60 days of a non-fraud notice means no penalty at all.
Which section applies
The section follows the financial year of the demand, not the date of the notice. Sections 73 and 74 cover tax for periods up to 2023-24. Section 74A, inserted by the Finance (No. 2) Act, 2024 and in force from 1 November 2024, covers 2024-25 onward and treats fraud and non-fraud cases in one section with different penalties.
Before the notice, the officer may send an intimation in DRC-01A. It is optional, and its absence does not by itself make the notice invalid.
Check it is genuine. Log in to the GST portal and open Services, User Services, View Notices and Orders. A notice issued on the portal carries a reference number (RFN) that can be checked on the portal’s verify RFN service; a notice that is on neither should be treated with suspicion.
Time limits for the department
| Section | Periods | Notice | Order |
|---|---|---|---|
| 73 (no fraud) | Up to 2023-24 | At least 3 months before the order deadline | Within 3 years of the annual return due date |
| 74 (fraud or suppression) | Up to 2023-24 | At least 6 months before the order deadline | Within 5 years of the annual return due date |
| 74A | 2024-25 onward | Within 42 months of the annual return due date; none if the amount is under ₹1,000 for the year | Within 12 months of the notice, extendable by up to 6 months |
An order not issued in time means the proceedings are treated as concluded under section 75(10).
Penalty, and how paying early reduces it
| Situation | Section 73 (to 2023-24) | Section 74 (to 2023-24) | Section 74A (2024-25 on) |
|---|---|---|---|
| Penalty in the order | 10% of tax or ₹10,000, whichever is higher | Equal to the tax | No fraud: 10% or ₹10,000. Fraud: equal to the tax |
| Paid before the notice | No penalty | 15% | No fraud: none. Fraud: 15% |
| Paid after the notice | No penalty if paid within 30 days | 25% if paid within 30 days | No fraud: none if paid within 60 days. Fraud: 25% within 60 days |
| Paid after the order | 50% if paid within 30 days of the order | Fraud: 50% within 60 days of the order |
Interest under section 50 is payable in every case.
How to reply
- Read the full notice, not only the DRC-01 summary, and list each allegation and amount.
- Check the period, the section and whether the notice is within time.
- Reconcile each amount and gather evidence: invoices, contracts, e-way bills, proof of payment to suppliers and their GSTIN status.
- Decide what to pay now through DRC-03 to cut the penalty, and what to contest.
- File the reply in DRC-06, ask in writing for a personal hearing, and attend it. Adjournments are allowed up to three times.
The order cannot go beyond the amount or grounds in the notice. It is uploaded as a summary in DRC-07.
If you ignore it, and the appeal
The officer passes an order on the material available, confirming tax, interest and penalty, and recovery follows. An appeal lies to the Appellate Authority under section 107 within three months of the order, after paying the admitted amount and 10% of the disputed tax.
Frequently asked questions
Which section applies to a GST notice for 2024-25?
Section 74A, which applies to tax for 2024-25 onward. Sections 73 and 74 continue for periods up to 2023-24.
What is the time limit to reply to DRC-01?
The time stated in the notice, often 30 days; the law does not fix it. The deadlines that matter most are the 30 or 60-day windows to pay with reduced or no penalty.
Can the penalty be avoided?
In a non-fraud case, yes: pay the tax and interest within 30 days of a section 73 notice, or within 60 days of a section 74A notice, and no penalty is levied.
Is DRC-01A compulsory before a show cause notice?
No. The officer may issue DRC-01A, but it is optional and its absence does not by itself invalidate the notice.
How do I appeal a GST demand order?
File an appeal with the Appellate Authority under section 107 within three months of the order, after paying the admitted dues and 10% of the disputed tax.
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Official references
The statutory sources behind this page. We keep our guidance aligned to them: verify anything time-sensitive directly.
- Ministry of Corporate AffairsCompanies Act filings, forms and fee schedules
- Income Tax DepartmentReturns, forms, rates and e-filing utilities
- GST PortalRegistration, returns and rate notifications
Facts on this page are checked against these sources; the date of the last check is shown at the top of the page. It is general guidance, not advice on your specific facts. How we write and check our guides.