For voluntary tax contributions toward demands or tax shortfalls discovered later after the deadline for filing returns for a financial year has passed, a DRC-03 form present under the GST legislation must be filed. These voluntary tax contributions can be made before the issuance of the notice (covered under sections 73 and 74) or within the first 30 days of the SCN or Show-cause notice. This form is covered under CGST Rules 142(2) and (3).
The most frequent cause for paying using DRC-03 is when a GST auditor discovers that you have been undercutting your taxes, interest, or penalties.
If the auditor finds that you have claimed higher inputs in your tax credit than what you were authorised to (for the year under review), and the deadline for reporting the error in the GST returns has already passed, a similar circumstance may also occur. In any case, you must voluntarily submit a payment using the DRC-03 (& report it in GSTR-9).
If you are the subject of a criminal investigation and it is discovered that you have not made the required tax payments, then you must make a voluntary tax payment using GST DRC-03.
It is customary for individuals to reconcile their financial and accounting records for the year before submitting their annual returns. Let's say you find out you owe back taxes, interest, or penalties for failing to register taxable supplies correctly. In that scenario, you may decide to use the DRC-03 voluntary tax payment form to make up the tax difference.
In February 2021, the GST site included this choice when users were asked why they were utilising the DRC-03 form. If the tax department has notified the taxpayer of a discrepancy, such as a gap in tax due between GSTR-3B and GSTR-1, the taxpayer must pay the amount owed in DRC-03 or respond with an explanation of the discrepancy.
In February 2021, the GST site also included this as a choice for choosing the reason when making payments in DRC-03. The tax authority may send the notice for GSTR-3B claims for extra ITC claims (over and above the authorised amount under CGST Rule 36(4) of 5% of Input Tax Credit in GSTR-2B) as compared to GSTR-2B. The taxpayer must utilise this form to deposit any further ITC claims.
While responding to an SCN, the taxpayer has the option to submit a DRC-03 payment that includes both the tax and interest that is due, as long as it is received within 30 days after the problem that was the subject of the show-cause notice.
For the purpose of making a voluntary payment of unpaid obligations per Section 73 as well as 74 of the CGST Act, Form DRC-03 is filed. To avoid the inconveniences of demanding and recovery procedures, a taxpayer might self-assure the tax before the issuing of the show-cause notice or even within 30 days of the SCN decision.
For instance, it will be regarded as paid within the requisite month if you receive a notification in June and pay by July. But if you wait until August to make the payment, it won't be taken into account (and not be handled differently from other tax payments).
Note: Instances of non-payment or underpayment of tax with no purpose or hint of fraud are covered by Section 73.
Section 74 deals with situations in which there is fraud or intentional non-payment or underpayment of tax.
It is possible to pay taxes voluntarily using the form DRC-03. When a Show-cause notice has already been issued, voluntary payment may be paid either before the notice is issued or within 30 days of the notice's issuance.
According to CBIC, taxpayers must disclose information about the SCN if the amount has been paid within 30 days after the notice's issuance, scrutiny, tax notification obtained by Form GST DRC01A, audit, inspection, or inquiry.
There is a particular time limit for filling out the GST form DRC-03, beyond which your application will not be considered by the tax department.
The applications for the voluntary payment intimations process may be stored in the GST system’s servers for up to 15 days at any time during the procedure. This means that if you fail to submit your application after 15 days, it will be deleted from the GST system.
Scenario 1: You haven’t paid anything and don’t have a PRN (Payment Reference Number).
Scenario 2: You had produced a PRN but did not use it and showed up for payment up to 30 minutes from when it was generated.
Scenario 3: You produced a PRN but did not use it and came for payment 30 minutes after the PRN was generated.
On the optional page for payment, fill in the necessary information. 'Cash Ledger Balance', 'Credit Ledger Balance' and 'Liability Details'are the three divisions.
Next, select one of the three possibilities listed under "Cause of Payment" (SCN, Voluntary and Others).
Choose the appropriate section and linked financial year from the list provided if “voluntary” payment is chosen.
If “SCN” is used, choose the pertinent financial year and section, then type in the correct date and SCN reference number (which are either generated by the system or entered manually).
If you choose the “Others” option from the list of alternatives, you must provide the relevant financial year and department
Once the ITC and cash amount utilised in making the payment are shown in the confirmation message, click "OK" to establish a PRN and produce a payment success message.
Note: Applications for voluntary payment intimations may be retained at any point in the process for up to 15 days. The stored draft will be erased from the GST system if it is not submitted within 15 days.
First proceed to Services, followed by user services, and then My Stored Applications to access your saved applications.
If you fall into scenario two, then Select "Yes" next to "Have You Made Payment?" and enter your PRN.
A link that reads "get payment details" will be present. Follow the link on it, and the information will automatically populate according to the payment made.
Select the "Preview" option to examine the DRC-03 draught before proceeding with the application as usual.
Lastly, if you fall into the third scenario, Fill out the PRN by selecting the section "Have You Made Payment?".
The information on the "obtain payment details" link will not automatically fill this time, therefore you will need to manually enter it. It is because the half-hour timer has run out.
Fill out rest of the application using standard procedures.
So, as a taxpayer, this is all the information you need on the GST DRC-03 Form. We have covered everything from what the form is and when you should make use of it, what are prerequisites you need to consider, the time limit for the form as well as the steps you must take to finally fill out the DRC-03. All this information should give you a pretty good understanding of whether or not you need to fill out this form. But if you still feel that you have some confusion regarding this form, it might be best for you to talk to an expert to clear out the confusion.
If a demand notice is received, payment may be made using ITC and any remaining cash in the Cash Ledger. A new cash challan must be made in order to make the remaining payment in cash. Interest and penalties must be paid necessarily in cash.
Taxpayers will be offered the opportunity to settle any additional liabilities stated on this form through DRC-03 near the end of the return. The drop-down menu on DRC-03's "Annual Return" section must be selected by the taxpayer. It should be highlighted that only an electronic cash ledger can be used to pay for such liabilities.
However, if liability has developed as a result of unapproved credit, it can be settled using the electronic credit ledger. Check Column No. 10 of Serial No. 7 of GST DRC 03, where it is stated that payments made with cash or credit are acceptable, subject to the circumstances.
No, you can not make payments in this way. The show-cause notice's liability is not really subject to partial payments from the taxpayer. Making partial payments is not even an option in the GST system.
After reviewing the application for eligibility and completion, if the proper officer determines that all or any portion of the claimed amount is eligible for a refund, they must request in writing from the taxpayer that the amount is deducted from his computerised credit ledger using Form GST DRC-03.
After submitting form DRC-03, all three ledgers—the electronic cash ledger, the electronic liability ledger, and the electronic credit ledger—will then be updated. This means the appropriate credit and debit entries will be made, and the Payment Reference Number will be generated.