GSTR-3B vs. GSTR-1 Mismatch Notices: 2025 SOP & Penalty Grid

As we enter FY 2025–26, one of the most common triggers for GST notices is the mismatch between GSTR-3B (summary return) and GSTR-1 (outward supply return). With the GSTN’s automated reconciliation system and real-time data sharing with tax officers, even minor differences in reported data can now lead to system-generated notices, interest, or even penalties.

This blog outlines the updated SOP (Standard Operating Procedure) for mismatch resolution in 2025 and the financial penalties you may face if errors are left unresolved.

Legal Reference

• Section 37 and Section 39, CGST Act, 2017
• Rule 88C, CGST Rules: Notices for GSTR-1 vs. GSTR-3B mismatch
• GST Circular No. 183/15/2022-GST: Prescribes steps to handle mismatches
• Automated notices issued via Form DRC-01B under Rule 88C

What Triggers a Mismatch Notice?

GST portal automatically flags mismatch if:

• Sales reported in GSTR-1 > GSTR-3B
• Tax liability declared in GSTR-3B < auto-populated data from GSTR-1
• Zero or reduced tax declared in GSTR-3B despite invoices raised in GSTR-1

Such mismatches are flagged monthly or quarterly depending on filing frequency.

SOP for Handling GSTR-3B vs. GSTR-1 Mismatch (2025 Version)

Step 1: GSTN Flags the Mismatch

A notice is sent via Form DRC-01B, specifying invoice-level data and tax difference.

Step 2: Response Within 7 Days

You must either:

• Pay the differential tax using Form DRC-03, or
• Submit an explanation online justifying the difference.

Step 3: No Action = Recovery

If no action is taken within 7 days:

• The difference is considered admitted
• Recovery begins without further notice under Section 79

Common Reasons for Mismatch

• Timing difference between invoice generation and GSTR-3B filing
• Human error or incorrect tax rate applied
• Failed auto-import of GSTR-1 to 3B in ERP
• Missing debit notes or amendments
• Manual override of pre-filled values

Penalties & Interest (FY 2025–26)

Best Practices to Avoid Mismatches

1. Reconcile GSTR-1 and GSTR-3B monthly before filing
2. Use automated GST reconciliation tools that alert you to gaps
3. Cross-verify e-Invoice data with GSTR-1 auto-drafted info
4. Avoid manual changes unless backed by documentation
5. Maintain audit logs and filing proofs for every return
6. Amend previous period returns instead of forcing corrections in current period

Example

Company ABC reported ₹25 lakh sales in GSTR-1 for May 2025 but only ₹22 lakh in GSTR-3B.

• DRC-01B was issued on June 15
• They filed DRC-03 and paid ₹54,000 tax difference + ₹810 interest
• Notice was closed with no further penalty

Had they ignored the notice, the full ₹54,000 could have been recovered forcibly with 100% penalty.

Conclusion

With automated scrutiny under Rule 88C, GSTR-1 and 3B mismatches are no longer safe to ignore. Start-ups, e-commerce sellers, and service providers must adopt robust reconciliation processes and train internal finance teams to handle GST returns with accuracy and consistency.

Call to Action and Disclaimer

Received a mismatch notice or want to build a monthly GST reconciliation system?

Schedule a meeting with our Chartered Accountant, Anshul Goyal, by visiting:

Disclaimer: I am Anshul Goyal, a Chartered Accountant licensed with ICAI, India. This content is meant for general awareness and is not a substitute for professional advice.

Frequently Asked Questions

1. Can I revise GSTR-3B after filing?
No. GSTR-3B cannot be revised. Corrections must be made in future returns.

2. Is it mandatory to reply to DRC-01B?
Yes. If no reply or payment is made within 7 days, recovery starts automatically.

3. Can I amend GSTR-1 to match GSTR-3B?
Yes, but that does not stop the liability raised unless DRC-03 is filed or explanation is accepted.

4. Will I get a hearing before recovery?
No. As per Rule 88C, recovery begins automatically if no action is taken.

5. Do export invoices cause mismatch?
Yes, if they are reported in GSTR-1 but omitted in 3B under zero-rated supplies.