Scrutiny of FY 2024-25 GST returns has started, and it is the first year where any demand falls under the new Section 74A. Most notices that reach small and mid-sized businesses follow the same path: a scrutiny notice, then an intimation, then a show cause notice. The earlier you answer properly, the cheaper it usually is.
The notices you are most likely to see
- ASMT-10 — scrutiny of returns (section 61). The officer lists discrepancies in your returns. You reply in ASMT-11 within 30 days, either explaining the difference or paying the tax with interest. A good reply here often closes the matter.
- DRC-01A — intimation before a show cause notice. This tells you the tax the officer proposes to demand. Since 2024 it is optional for the officer, but when it comes you can pay or object in Part B. Pay the part you accept with DRC-03 and explain the rest.
- DRC-01 — show cause notice. This is the formal demand. You reply in DRC-06 within the time given in the notice, usually 30 days, and you can ask for a personal hearing.
Why the notice usually comes
- Tax shown in GSTR-1 is higher than tax paid in GSTR-3B.
- ITC claimed in GSTR-3B is higher than what appears in GSTR-2B. Our note on GSTR-2B reconciliation covers this in detail.
- Turnover or ITC in GSTR-9 doesn't match the books or the audited accounts.
- E-way bills generated don't match the supplies reported.
- ITC was taken on invoices from suppliers whose registration was later cancelled.
Section 74A: what changed from FY 2024-25
Up to FY 2023-24, demands were raised under section 73 (no fraud) or section 74 (fraud or suppression), each with its own time limit. From FY 2024-25, Section 74A covers both, with one timeline:
- Show cause notice: within 42 months of the due date of the annual return. For FY 2024-25, the GSTR-9 due date was 31 December 2025, so a notice can come until 30 June 2029.
- Order: within 12 months of the notice. This can be extended by up to 6 months.
- Small amounts: no notice is issued if the tax involved is less than ₹1,000.
| Penalty under 74A | No fraud | Fraud or suppression |
|---|---|---|
| Standard | 10% of tax or ₹10,000, whichever is higher | 100% of tax |
| Tax and interest paid before the notice | Nil | 15% of tax |
| Paid within 60 days of the notice | Nil | 25% of tax |
| Paid within 60 days of the order | — | 50% of tax |
If part of the demand is clearly right, paying that part early with interest usually saves the penalty on it. You can still contest the rest.
How to reply well
- Read the period and the figures first. Many notices compare the wrong months, or count an amendment twice.
- Reconcile the line items. Prepare a working that links each difference to an invoice, a credit note, an amendment in a later return, or a timing difference.
- Attach evidence. Invoices, ledgers, e-way bills, payment proof and supplier confirmations, organised in the order of the notice.
- Reply on the portal before the date. If you need more time, ask for an extension in writing before the deadline. Don't let the date pass.
- Ask for a personal hearing if the amount is significant, and keep a record of what was said.
Ignoring a notice is the expensive option. The officer can pass an order without hearing you, and the demand then has to be fought in appeal, which needs a pre-deposit.
How Vitt-Marg helps
We review the notice, reconcile your returns with the books and GSTR-2B, draft the reply in ASMT-11, DRC-01A Part B or DRC-06, and attend the hearing with you. Where some tax is genuinely payable, we work out the amount and interest so you pay only that, at the lowest penalty. For ongoing compliance, see our GST services in Noida.
General information, current as of October 2026, not advice for a specific case. GST and income-tax rules change often — check with us before acting on it.