GST Form DRC-03: paying tax, interest or penalty voluntarily, and doing it so it counts

Last updated 23 Oct 2026 · India

Short answer. Form GST DRC-03 is used to make a voluntary payment of tax, interest and penalty, for example when you find a short payment during reconciliation or audit, or to pay against a show cause notice or statement. Paying the tax with interest (section 50) before a show cause notice is issued usually means no notice is issued for that amount under the self-assessment provisions (sections 73(5)/74(5), and section 74A for periods from FY 2024-25). You choose the cause of payment on the GST portal (voluntary, audit, investigation, SCN and so on), pay from the cash or credit ledger as the law allows, and keep the ARN to send to the officer. Penalty and interest cannot be paid from the credit ledger.

When to use it

Situation	Cause of payment to pick
Short payment found by you in reconciliation	Voluntary
Found during a departmental audit	Audit
Against a show cause notice, within 30 days of it	SCN
Annual return differences (GSTR-9)	Annual return

Common mistakes

Paying tax but not interest. Interest under s.50 runs from the original due date; leaving it out keeps the matter open.
Wrong cause of payment or wrong period, so the payment is not linked to the demand. Later, adjustment needs DRC-03A for demands created on the portal.
Using ITC for interest or penalty. Those go in cash.
Not intimating the officer. Send the DRC-03 ARN in writing, especially after an audit or ASMT-10.

Checklist

Short payment worked out by period and head (CGST/SGST/IGST/cess)
Interest at the s.50 rate added
Correct cause of payment and period
ARN saved and sent to the officer

Frequently asked questions

What is GST DRC-03 used for?

Voluntary payment of tax, interest and penalty, and payments against audit findings, notices or annual-return differences.

Can I pay interest through ITC in DRC-03?

No. Interest and penalty are paid from the electronic cash ledger.

Does paying in DRC-03 stop a notice?

Paying the tax with interest before a show cause notice generally means no notice is issued for that amount under the self-assessment provisions of sections 73/74/74A. Confirm your facts with your CA.

Official sources

Not tax or legal advice. This is a free explainer of public rules; deadlines and rules can change by notification, so confirm on the official portal or with your CA before you file. Last checked 23 Oct 2026.

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