Published Quick answer — GST show cause notices in 2026:
| Point | Position |
|---|---|
| FY 2017-18 to 2023-24 | Section 73 (no fraud) or section 74 (fraud, wilful misstatement or suppression) |
| FY 2024-25 onwards | Section 74A, one section for both, with a single time limit |
| Time limit under 74A | Notice within 42 months of the due date of the annual return; order within 12 months of the notice, extendable by 6 months |
| Notice and reply | Notice in DRC-01 (often after a DRC-01A intimation); reply in DRC-06, usually within 30 days |
| Penalty if paid early | No penalty in non-fraud cases if tax and interest are paid within the window (30 days under section 73, 60 days under section 74A) |
| If the order goes against you | First appeal in APL-01 within three months, with a 10% pre-deposit of the disputed tax |
In short: A GST show cause notice in Form DRC-01 is answered in Form DRC-06, usually within 30 days. For FY 2017-18 to 2023-24 it is issued under section 73 (no fraud) or section 74 (fraud); from FY 2024-25 under section 74A, with the notice due within 42 months of the annual return due date and the order within 12 months. In non-fraud cases, paying tax and interest within 30 days (section 73) or 60 days (section 74A) of the notice avoids penalty. Contest the rest with reconciliations and ask for a personal hearing.
A GST show cause notice in Form DRC-01 is the formal start of a demand. Most notices arise from return mismatches (GSTR-1 against GSTR-3B, or credit in GSTR-3B against GSTR-2B), a departmental audit, or the findings of a search. Many can be closed at the reply stage if the reply deals with each allegation using the books. This guide explains which section applies, the time limits, the penalty for paying early and how to build the reply.
Which section applies: 73, 74 or 74A?
| Tax period | No fraud | Fraud or suppression |
|---|---|---|
| FY 2017-18 to FY 2023-24 | Section 73: order within 3 years of the due date of the annual return; notice at least 3 months before that | Section 74: order within 5 years; notice at least 6 months before that |
| FY 2024-25 onwards | Section 74A: notice within 42 months of the due date of the annual return; order within 12 months of the notice, extendable by 6 months | Section 74A, same time limits; higher penalty |
The first check on any notice is whether the right section has been invoked for the period. Courts have set aside orders for FY 2024-25 onwards that were passed under section 74 instead of section 74A. The second check is whether the notice was issued in time. No notice can be issued under section 74A where the tax for the year is below ₹1,000.
How much penalty applies, and how can paying early reduce it?
| When paid (tax and interest) | Section 73 | Section 74 | Section 74A, no fraud | Section 74A, fraud |
|---|---|---|---|---|
| Before the show cause notice | No penalty | 15% | No penalty | 15% |
| After the notice, within the window | No penalty if paid within 30 days | 25% if paid within 30 days | No penalty if paid within 60 days | 25% if paid within 60 days |
| After the order | 10% of tax or ₹10,000, whichever is higher | 50% if paid within 30 days of the order, otherwise 100% | 10% of tax or ₹10,000, whichever is higher | 50% if paid within 60 days of the order, otherwise 100% |
Pay what you accept through DRC-03 and contest the rest. That lowers interest and penalty on the admitted part and keeps the dispute focused.
What is DRC-01A and how should you reply to it?
Before issuing DRC-01, the officer may send an intimation in Form DRC-01A (rule 142(1A)) with the tax ascertained. Reply to it in Part B with your explanation, or pay what is accepted through DRC-03. A good reply at this stage can stop the notice. DRC-01A is only an intimation: it is not a demand and cannot itself be recovered.
How do you reply to a GST show cause notice in DRC-06?
- Identify the section and the period and check limitation for that year.
- Check jurisdiction: is the notice from the officer assigned to your GSTIN (Central or State), and does it duplicate a notice from the other?
- List each allegation and the amount the notice attaches to it.
- Reconcile each one with GSTR-1, GSTR-3B, GSTR-2B, the books, e-way bills and e-invoices. Most credit mismatches resolve into timing differences, wrong GSTIN, credit notes or supplier filing delays.
- Attach the evidence: reconciliations, supplier confirmations, payment proof, ledger extracts and earlier correspondence.
- Raise legal grounds where they apply: limitation, wrong section, lack of evidence of fraud in a section 74 notice, and the section 128A waiver for eligible section 73 demands of 2017-18 to 2019-20.
- File the reply in DRC-06 by the date in the notice. Ask in writing for a personal hearing.
Do you get a personal hearing before the order?
A personal hearing must be given where you ask for one in writing or where an adverse decision is contemplated (section 75(4)). Up to three adjournments can be given for sufficient cause (section 75(5)). The order cannot confirm a demand on grounds not in the notice, or for an amount higher than the notice. The order is issued in DRC-07 with a summary on the portal.
What if the GST order goes against you?
File a first appeal in Form APL-01 within three months of the order being communicated, with a pre-deposit of 10% of the disputed tax (section 107(6)). Recovery of the balance is stayed while the appeal is pending. After the first appeal, the next forum is the GST Appellate Tribunal, with a further 10% pre-deposit.
Need help with this? We reply to DRC-01A intimations and DRC-01 show cause notices, prepare the reconciliations, attend personal hearings and file first appeals and GSTAT appeals. See GST notices and appeals in Kochi or book a GST review call.
Frequently asked questions
What is a GST show cause notice?
A show cause notice in Form GST DRC-01 asks a taxpayer to explain why tax, interest and penalty should not be demanded. It is issued under section 73 or 74 of the CGST Act for FY 2017-18 to 2023-24, and under section 74A from FY 2024-25.
How many days do I have to reply to a GST show cause notice?
The notice states the date, usually 30 days from issue. The reply is filed in Form DRC-06 on the GST portal. An extension can be requested in writing, but it is not a right.
What is the difference between section 73 and section 74?
Section 73 applies where there is no fraud, wilful misstatement or suppression, and carries lower penalty and a 3-year limit for the order. Section 74 applies where there is fraud or suppression, with a 5-year limit and penalty of up to 100% of the tax. Both apply to FY 2017-18 to 2023-24.
What is section 74A of the CGST Act?
Section 74A applies from FY 2024-25. It replaces sections 73 and 74 for those years with one section and one time limit: notice within 42 months of the due date of the annual return and order within 12 months of the notice, extendable by six months. Penalty depends on whether fraud is involved.
Is there a penalty if I pay after receiving DRC-01?
In a non-fraud case there is no penalty if tax and interest are paid within 30 days of the notice under section 73, or within 60 days under section 74A. In fraud cases, payment within that window reduces the penalty to 25% of the tax.
What is DRC-01A?
DRC-01A is an intimation of tax ascertained, sent before a show cause notice under rule 142(1A). You can reply in Part B or pay through DRC-03. It is not a demand and cannot itself be recovered.
Can I ask for a personal hearing?
Yes. Section 75(4) requires a hearing where it is requested in writing or where an adverse decision is contemplated. Up to three adjournments can be given for sufficient cause.
What if the GST order goes against me?
File a first appeal in Form APL-01 within three months, with a pre-deposit of 10% of the disputed tax. Recovery of the balance is stayed. The next appeal lies to the GST Appellate Tribunal.
Related guides
- GST audit and assessment services in Kochi: notices, audits and appeals
- GST raid: inspection, search, summons and arrest
- Section 128A GST waiver of interest and penalty
- GST Appellate Tribunal (GSTAT): how to appeal
- Input tax credit time limit under section 16(4)
Sources
- Central Goods and Services Tax Act, 2017, sections 73, 74, 74A, 75 and 107; CGST Rules, 2017, rule 142 — CBIC GST
This guide reflects the law as at 11 November 2026. It is general information, not advice on a specific case.