TaxTMI 
TaxTMI 
During Audit u/s 65, it was observed there was short payment of 9 lakh for the period 17-18, 18-19, 19-20, 20-21. Auditor has sent ADT 02 with their observation of short payment of 9 lakh. Ten lakh ITC is available in credit ledger as on date, can we pay demand raised under audit observation by DRC 03 utilising credit balance available in portal.
DRC 03 PAAYMENT
14 Feb 2023 
2 Replies 
1204 Views Asked by
Input tax credit usage: cannot discharge reverse charge demands, but may pay other output tax liabilities from credit ledger.
Payment of a demand via DRC-03 is subject to credit utilisation rules: Input Tax Credit in the electronic credit ledger may be applied to output tax liabilities except those arising under the reverse charge mechanism; demands attributable to RCM cannot be discharged using ITC. Administrative guidance and the DRC-03 form columns govern procedural compliance for such settlements. (AI Summary)
Payment of a demand via DRC-03 is subject to credit utilisation rules: Input Tax Credit in the electronic credit ledger may be applied to output tax liabilities except those arising under the reverse charge mechanism; demands attributable to RCM cannot be discharged using ITC. Administrative guidance and the DRC-03 form columns govern procedural compliance for such settlements. (AI Summary)