GST demand notices from FY 2024-25: how section 74A changed the time limits and penalties

Last updated 25 Oct 2026 · India

Short answer. For demands relating to FY 2024-25 and later, the CGST Act uses section 74A instead of sections 73 and 74. The officer must issue the show cause notice within 42 months from the due date of the annual return for that year, and pass the order within 12 months of the notice (extendable by up to 6 months). In a non-fraud case the penalty is 10% of the tax or ₹10,000, whichever is higher, and if you pay the tax and interest within 60 days of the notice, no penalty is payable. In fraud or suppression cases the penalty is equal to the tax, reduced to 15%, 25% or 50% if you pay before the notice, within 60 days of it, or within 30 days of the order. No notice is issued if the tax involved is below ₹1,000.

What to do when a 74A notice arrives

Check the tax period. Notices for FY 2023-24 and earlier still run under sections 73 and 74.
Check the date: was it issued within 42 months of the annual return due date for that year?
Separate the demand into amounts you accept and amounts you dispute.
For accepted amounts in a non-fraud case, pay tax and interest within 60 days (DRC-03) to avoid penalty on them.
Reply to the rest in DRC-06 with documents, and ask for a personal hearing if you need one.

Common mistakes

Replying under section 73 rules to a FY 2024-25 notice; the penalty and timelines are different.
Letting the 60 days pass on amounts you would have paid anyway.
Paying without linking the payment to the notice, so the officer does not see it.
Ignoring the hearing notice. The order can be passed ex parte.

Checklist

Tax period and section confirmed (74A or 73/74)
42-month limit checked
Accepted amount paid within 60 days
DRC-06 reply filed with documents

Frequently asked questions

What is the time limit for a GST show cause notice under section 74A?

42 months from the due date for furnishing the annual return for the financial year concerned; the order must follow within 12 months of the notice, extendable by up to 6 months.

What is the penalty under section 74A in a non-fraud case?

10% of the tax or ₹10,000, whichever is higher. No penalty is payable if tax and interest are paid within 60 days of the notice.

Which years does section 74A apply to?

Tax for financial year 2024-25 onwards. Earlier years stay under sections 73 and 74.

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 25 Oct 2026.

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