Got a GST notice? A travel agency's response playbook

An SMS lands on your phone: a notice is waiting in your GST portal. Your first instinct is to assume the worst and your second is to forward it to your CA and hope. Neither gets you a clean reply on time.

Most GST notices a travel agency receives aren't a fraud investigation. They're a system-generated flag: a number in your return didn't match a number somewhere else. There's a specific form, a specific reply, and usually a specific deadline attached to it. The trick is knowing which notice you're holding before you start typing.

This playbook covers the three notices small and mid-sized agencies actually get: the scrutiny notice (ASMT-10), the automated ITC-mismatch intimation (DRC-01C), and the formal show-cause notice (DRC-01). It also covers the travel-specific reasons your GSTR-2B and GSTR-3B stop matching in the first place, because most agencies get the same four things wrong.

What kind of notice did you actually get

The form number in the subject line or portal tab tells you everything about what happens next.

Notice	What it means	Your reply
ASMT-10	Officer has flagged a discrepancy in your filed returns	ASMT-11
DRC-01C	System has flagged a gap between ITC in GSTR-2B and what you claimed in GSTR-3B	Part B: reconcile or pay
DRC-01	Formal show-cause notice: the department intends to raise a demand	DRC-06

Read the reference number and the section quoted before you do anything else. A DRC-01C is a different animal from a DRC-01, even though the names look similar, and treating one like the other wastes your reply window.

The scrutiny notice: ASMT-10 and your 30-day window

An ASMT-10 usually means an officer has looked at your filed returns and found something worth asking about: a turnover figure that doesn't tally, an ITC claim that looks high for your declared rate, or a tax liability that seems short.

You reply in Form ASMT-11, normally within 30 days. If your explanation is accepted, the officer closes the matter with an order in ASMT-12, and that's the end of it. No demand, no penalty, just a closed file.

If part of the discrepancy is genuine (say you did claim ITC you weren't entitled to on a few invoices), you can accept that portion and pay it voluntarily through Form DRC-03 while disputing the rest in your ASMT-11 reply. Paying the undisputed part upfront, with your working shown, tends to get the disputed part looked at more carefully rather than lumped in with everything else.

Careful: the 30-day clock starts running from when the notice is issued or served, not from the day you happen to check the portal. Set a reminder the day the notice arrives, not the day you remember it exists.

DRC-01C: when your GSTR-2B and GSTR-3B don't match

This is the notice most 5%-rate tour operators are seeing right now, and it's almost entirely automated. DRC-01C is the system intimation issued when the ITC available in your GSTR-2B differs from what you actually claimed in GSTR-3B.

You respond in Part B, and you have two options: reconcile the difference with an explanation, or pay the excess ITC via Form DRC-03. There's no fixed statutory reply window quoted in the GSTN's own manual the way ASMT-10 has its 30 days, but in practice you should not sit on it. Many agencies report that their next GSTR-1 filing gets held up on the portal until the DRC-01C is addressed. Treat that as a strong operational reason to move fast, and confirm the current portal behaviour with your CA rather than assuming it either way.

Before you reconcile or pay, check whether the gap is even real. The most common reasons an ITC mismatch shows up on paper without any actual wrongdoing on your part are your supplier filing their GSTR-1 late, genuine timing differences across return periods, and import IGST claimed through ICEGATE that hasn't yet flowed into your GSTR-2B. None of these mean you did anything wrong. They mean the two ledgers haven't caught up with each other yet, and your Part B reply should say exactly that, with dates and invoice references attached.

Example: Your GSTR-3B for a quarter shows ₹1,80,000 in ITC claimed. GSTR-2B for the same period shows only ₹1,42,000 available. The ₹38,000 gap triggers DRC-01C. On checking, ₹25,000 of it is one hotel supplier who filed their GSTR-1 three weeks late. It now appears in the following period's 2B. The remaining ₹13,000 was genuinely over-claimed on a supplier invoice you'd already paid in cash without GST. You reconcile the ₹25,000 with the supplier's delayed filing date as evidence, and pay the ₹13,000 through DRC-03 rather than argue a point you'll lose.

When it escalates: the show-cause notice and DRC-01

If a DRC-01C reply is rejected, or the department decides the discrepancy warrants formal action rather than a system-level fix, the next step up is a proper show-cause notice, typically issued as DRC-01, with your response filed as DRC-06. This is a different tier from the two notices above: it usually means the department intends to raise a demand and is giving you a chance to contest it before the order is passed, sometimes with a personal hearing attached.

This is the stage to bring in your CA or a GST practitioner directly rather than replying yourself. The timelines and procedural requirements at this level are specific to the section invoked and the facts of your case. Confirm both with your CA before you file anything, rather than relying on a general template.

The cost of getting a mismatch demand wrong, or letting it go unanswered, is real money. Once a demand is confirmed, the penalty is 10% of the tax involved under Section 73 for ordinary (non-fraud) cases, or up to 100% under Section 74 where fraud or wilful suppression is alleged, on top of interest at 18% per annum running from the original due date, not from the date of the notice. These are the rates as of July 2026. Confirm current figures with your CA before you calculate what you owe. On a ₹1,80,000 mismatch left unresolved for six months, that's roughly ₹18,000 in penalty plus another ₹16,200 in interest: a ₹34,000 problem that started as a reconciliation exercise.

Four reasons travel agencies get flagged

Automated matching is why mismatch notices are being mass-issued right now, and travel agencies show up disproportionately for a handful of recurring reasons.

You're on the 5% rate and claimed ITC anyway. The 5% tour operator rate comes bundled with a no-ITC condition, covered in detail in the rate card and worked through with actual numbers in the 5%-vs-18% decision. If you're billing at 5% and any ITC shows up in your 3B (even a small, genuine-looking supplier credit), it's a mismatch by definition, not by accident. This is the single most common trigger CA firms report for 2025-26 notices.

Hotel ITC that was never yours to claim. Rooms billed under the lower-rate, no-ITC slab don't generate credit for you regardless of what the hotel's invoice shows. The specific room-rate threshold is covered in the rate card. If your accounting software or bookkeeper picked up ITC from a hotel invoice automatically, that credit needs reversing before it shows up as a mismatch, which is exactly the kind of rate-specific slip invoicing software built for travel agency GST rules is meant to catch before it reaches your return.

Your supplier never filed their GSTR-1. This is the most common false positive, and the one you can usually resolve fastest. Keep a running note of which supplier hotels and DMCs are chronically late filers. If the same three names keep showing up in your reconciliation, that's worth a direct conversation with them, not just another DRC-03 payment.

Your outbound GST turnover doesn't match your TCS data. Tax data from different departments is increasingly cross-checked automatically. If the turnover you've declared in your GST returns doesn't line up with the TCS your bank reported against your outbound sales (see the TCS playbook for how that collection actually works), expect questions, even if every individual invoice is correctly filed.

Build a reconciliation annexure before you reply

Whichever notice you're answering, the officer or the portal wants the same thing: a line-by-line explanation, not a paragraph of assurance. Keep a simple working sheet ready for every ITC claim over a threshold you set (₹10,000 is a reasonable cut-off for most small agencies):

Invoice / supplier	Taxable value	ITC in 3B	ITC in 2B	Reason for gap	Action taken
Hotel X, INV-4471	₹85,000	₹15,300	₹0	5% package rate, no ITC allowed	Reversed
DMC Y, INV-1102	₹1,20,000	₹21,600	₹21,600	Supplier filed late, now in 2B	Reconciled
Import agent, BOE-8834	₹40,000	₹7,200	₹0	ICEGATE IGST not yet in 2B	Reconciled, evidence attached

Attach this table to your ASMT-11 or DRC-01C Part B reply as-is. It shows the officer you've already done the checking they'd otherwise have to do themselves, and it's the single fastest way to move a notice from "under review" to "closed."

A checklist for the day a notice arrives

1. Read the form number and note the reply form it maps to (ASMT-11, DRC-01C Part B, or DRC-06).
2. Note the deadline and calendar it immediately. Don't wait to "look into it properly" first.
3. Pull GSTR-2B, GSTR-3B and your sales register for the period in question.
4. Build the reconciliation annexure above for every flagged line item.
5. Split genuine discrepancies (pay via DRC-03) from explainable ones (reconcile with evidence).
6. If the notice is a DRC-01, stop and call your CA before drafting anything.
7. File the reply through the portal, keep the acknowledgment, and calendar the follow-up date.

Common questions

Do I need a CA to reply to a GST notice?

For an ASMT-10 or DRC-01C with a straightforward reconciliation, a competent in-house bookkeeper following the format above can often handle it. For a DRC-01 show-cause notice, involve your CA or a GST practitioner directly. The stakes and the procedural requirements are higher.

What happens if I miss the reply deadline?

For ASMT-10, missing the 30-day window generally means the officer proceeds to determine the tax and raise a demand under Section 73 or 74 based on the discrepancy already on file, rather than wait any longer for your explanation. Silence is read as an inability to explain, not as agreement.

Can I ignore a notice if the amount is small?

No. A small mismatch left unanswered still accrues 18% per annum interest, and many agencies report it can hold up their next GSTR-1 filing on the portal too. The cost of a five-minute reply is always lower than the cost of a compounding one.

Does responding mean I'm admitting fault?

No. A reconciliation reply that explains a timing difference or a supplier's late filing is not an admission: it's evidence. Paying an undisputed portion via DRC-03 while contesting the rest is standard practice, not a concession on the whole notice.

Rules and portal behaviour around these forms have shifted before and will shift again. Confirm current timelines and thresholds with your CA before you file, especially for anything beyond a straightforward ASMT-10.

The short version

• Identify the form number first: ASMT-10 replies in ASMT-11 (30 days), DRC-01C replies in Part B, DRC-01 replies in DRC-06.
• A satisfactory ASMT-11 reply gets closed by ASMT-12 order: no demand, no penalty.
• DRC-01C is automated GSTR-2B vs GSTR-3B matching; reconcile genuine timing gaps, pay real over-claims via DRC-03.
• Unresolved mismatches carry 10% penalty under Section 73 (100% if fraud is alleged under Section 74) plus 18% p.a. interest.
• The four travel-specific triggers: ITC claimed on a 5%-rate invoice, ITC claimed on no-ITC hotel rooms, a supplier who filed GSTR-1 late, and outbound turnover that doesn't match your TCS data.
• Build a reconciliation annexure (invoice, taxable value, ITC in 3B, ITC in 2B, reason, action) before you reply to anything.
• Bring in your CA the moment a notice becomes a DRC-01 show-cause; don't reply to that one solo.