Two Returns, One Number That Must Match
GSTR-1 reports your outward supplies invoice by invoice, and it is what feeds your customers’ input tax credit. GSTR-3B is the summary return through which you actually pay. They serve different purposes, but the outward tax liability in both must agree. When it does not, the portal notices automatically. Under Rule 88C, where the liability declared in GSTR-1 exceeds the liability discharged in GSTR-3B by more than the notified threshold, a system-generated intimation in Form DRC-01B is issued, and you have seven days to pay the difference with interest or explain it.
Why the mismatch matters more than it used to
This is no longer an officer spotting something during scrutiny. Rule 88C was inserted in December 2022 by Notification 26/2022-Central Tax, and the comparison is automated. The portal runs it for every tax period.
There is a companion rule on the credit side. Rule 88D generates Form DRC-01C where the input tax credit claimed in GSTR-3B exceeds the credit available in GSTR-2B beyond the notified threshold. Between the two, both sides of your return are machine-checked against other data every month.
What the threshold is
Industry sources commonly cite a difference exceeding one lakh rupees, or twenty per cent, as the trigger. The rule itself refers to the amount and percentage recommended by the GST Council, and at least one current source notes that the exact figures are not confirmed in every case.
The practical conclusion: do not treat a small gap as safe. Reconcile for accuracy rather than to stay under a number.
The reconciliation sequence
Work in this order, because each step depends on the one before it:
Books to GSTR-1. Does every invoice in your sales register appear in GSTR-1, and only once?
GSTR-1 to GSTR-3B. Does the outward tax in GSTR-1 equal the outward tax declared and paid in GSTR-3B Table 3.1?
GSTR-2B to GSTR-3B. Is the credit claimed supported by the auto-generated statement?
Books to GSTR-2B. Does purchase credit in your books match what suppliers have actually reported?
E-invoice and e-way bill data against GSTR-1, where applicable.
Steps 1 and 2 prevent DRC-01B. Steps 3 and 4 prevent DRC-01C.
The errors that cause most mismatches
The same invoice reported twice in GSTR-1. This produces an apparent shortfall in GSTR-3B when the real liability was correct. It is one of the most common causes, and it is fixed with an explanation rather than a payment.
Credit notes in the wrong period. A credit note reduced in one return and not the other.
Amendments. An invoice amended in a later GSTR-1 while GSTR-3B carried the original figure, or the reverse.
Filing GSTR-3B before GSTR-1. The auto-population works from GSTR-1, so filing out of order invites manual figures that drift.
Advances and reverse charge. Tax on advances and liability under reverse charge sit in GSTR-3B without a matching GSTR-1 invoice line, so a reconciliation that ignores them shows a false gap.
Exports and zero-rated supplies recorded inconsistently between the returns.
If a DRC-01B arrives
Seven days, from the date of the intimation rather than the date you noticed it.
Two routes:
Pay the difference with interest, through the prescribed route, where the shortfall is real.
Explain it, where the gap is an artefact. A duplicate invoice in GSTR-1, a timing difference on a credit note or an amendment in a later period are all explanations rather than payments.
Ignoring it has a specific consequence: sources report that continued non-response blocks filing of the next GSTR-1 or IFF, which stops your customers getting their credit and escalates quickly.
The discipline that prevents it
Reconcile monthly, not at year end. File GSTR-1 before GSTR-3B. Track credit notes and amendments to the correct period. Keep a working paper for each month showing the tie-out, because that is what you will produce if anyone asks later.
How Northrop LLP helps
Northrop LLP runs the monthly tie-out across books, GSTR-1, GSTR-3B and GSTR-2B, produces the working paper, and responds to DRC-01B and DRC-01C intimations inside their windows.