Receiving a notice from the GST department is unsettling, but most notices are routine and resolvable if you respond properly and on time. They typically arise from a mismatch the system has flagged or a return you have not filed. Here's how scrutiny of your returns works, what the common notices are asking for, and how to file a structured reply through Form DRC-06.
Reviewed by CA Harika Chebolu, FCA · Last updated 2026-06-15
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A GST notice is not a verdict — it is a chance to explain. Here's how scrutiny works, what the common notices mean, and how to reply through Form DRC-06.
The department compares the returns you file against each other and against third-party data — your summary return against your outward-supply return, your claimed credit against your auto-drafted statement, and so on. Where the system finds a discrepancy, it raises a query. Most scrutiny is data-driven rather than personal, so the first step on receiving a notice is to read exactly what discrepancy is alleged and identify the figures it refers to. Understanding the precise mismatch is half the battle.
Notices range from a simple reminder for a return you have not filed, to a scrutiny notice asking you to explain a discrepancy, to a show-cause notice proposing a tax demand with interest and penalty. Each tells you what is alleged, what period it covers, and the time you have to respond. Do not ignore the deadline — an unanswered notice can escalate to an assessment made on the department's own estimate, which is much harder to undo than a timely, reasoned reply.
When a show-cause notice is issued proposing a demand, your reply is filed in Form DRC-06 on the portal. DRC-06 is the prescribed format for representing against the proposed demand — you state your case, refer to the relevant returns and documents, and attach supporting evidence. Filing through DRC-06 puts your explanation on record in the proper form, which matters if the matter proceeds further. A reply that is well organised and references specific invoices and returns is far more persuasive than a general denial.
A strong reply starts from reconciliation: pull the returns and books for the period, identify why the figures differ, and explain each difference with documents. Where the department is right and tax is genuinely due, paying it with interest at 18% per annum and saying so can close the matter and limit penalty exposure. Where the mismatch has an innocent explanation — a timing difference, a credit note, a clerical entry — set it out clearly with the supporting records. Respond within the time allowed, and ask for an extension formally if you need one.
Most notices trace back to mismatches that monthly discipline would have caught — credit claimed beyond what suppliers reported, sales reported in the wrong period, or returns filed late. Reconcile your credit against your auto-drafted statement each month, keep your returns consistent with your books, and file on time. When a notice does arrive, treat it as a deadline-driven task, not a crisis: read it carefully, reconcile, and reply in the proper form. Calm, documented, on-time replies resolve the large majority of GST notices.
Read exactly what discrepancy is alleged, which period it covers, and the deadline to respond, then reconcile the figures it refers to. Most scrutiny is data-driven, so identifying the precise mismatch is the starting point for a good reply.
It is the prescribed form for replying to a show-cause notice that proposes a tax demand. You state your case, reference the relevant returns and documents, and attach supporting evidence so your explanation is on record in the proper form.
An unanswered notice can escalate to an assessment made on the department's own estimate, which is much harder to undo than a timely reply. Always respond within the deadline, and request an extension formally if you need more time.
Received a GST notice or show-cause and not sure how to respond? Write to the firm and we'll reconcile the period and prepare your DRC-06 reply before the deadline.