Section 73 GST Notice explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
A section 73 notice is the department's route for a tax shortfall that is not alleged to be fraud. It works against a clock: the order must be passed within a fixed period, and the notice must be issued well before that. Checking those dates is often the first line of defence, and our GST notices and litigation team starts there.
Section 73 applies to periods up to FY 2023-24 where tax is unpaid, short paid, wrongly refunded or ITC wrongly availed or utilised for reasons other than fraud, wilful misstatement or suppression. The order must be passed within three years from the due date of the annual return for that year (or three years from an erroneous refund), and the notice at least three months before that date. Penalty is 10% of tax or Rs. 10,000, whichever is higher, and nil if you pay tax and interest before the notice or within 30 days of it. For FY 2024-25 onwards, section 74A applies.
What section 73 covers
The section applies where it appears to the proper officer that tax has not been paid or has been short paid, a refund was erroneously given, or ITC was wrongly availed or utilised, for a reason other than fraud or wilful misstatement or suppression to evade tax. He must serve a notice asking you to show cause why you should not pay the amount with interest under section 50 and a penalty. There is no "spot recovery": no amount can be demanded without a notice and the safeguards of section 75.
Since the Finance (No. 2) Act 2024 (effective 1 November 2024), the section is expressly limited to the period up to FY 2023-24. Later years go under section 74A (see the demand limitation map). The fraud route is covered in section 74.
The two clocks
| Item | Rule under section 73 |
|---|---|
| Order (section 73(10)) | Within 3 years from the due date for the annual return of the relevant financial year, or 3 years from the date of an erroneous refund |
| Notice (section 73(2)) | At least 3 months before the order deadline |
| Later periods (73(3)) | A statement (summary in DRC-02) can cover other periods if the grounds are the same as the earlier notice; it is deemed a notice |
| Penalty (73(9)) | 10% of tax or Rs. 10,000, whichever is higher |
| Exit (73(5) and 73(8)) | No penalty if tax and interest are paid before notice, or within 30 days of issue of the notice |
The notice summary is served in FORM GST DRC-01 and the order summary uploaded in DRC-07, which is treated as the recovery notice. Your representation goes in DRC-06. The Background Material also records an instruction that non-issue of these summaries on the portal violates the Rules.
Extended deadlines for the early years
The order deadline for the first three years was extended by notification. The Background Material lists:
| Financial year | Annual return due date | Original order deadline | Extended to | Further extended to |
|---|---|---|---|---|
| 2017-18 | 05.02.2020 / 07.02.2020 | 05.02.2023 / 07.02.2023 | 31.12.2023 | (none listed) |
| 2018-19 | 31.12.2020 | 31.12.2023 | 31.03.2024 | 30.04.2024 |
| 2019-20 | 31.03.2021 | 31.03.2024 | 30.06.2024 | 31.08.2024 |
The first extension came through Notification No. 09/2023-CT dated 31.03.2023, and the second (for 2018-19 and 2019-20) through Notification No. 56/2023-CT dated 28.12.2023. The material lists no extension for FY 2020-21 to FY 2023-24, so for those years the plain formula applies: three years from the annual return due date, which you read from the return due date notified for that year. Confirm the notified due date for the year on the GST portal or CBIC site before relying on it.
Illustration (not a real case): for a year whose annual return fell due on 31 December 2021, the order deadline under the plain formula would be 31 December 2024 and the notice would have to be issued by 30 September 2024. A notice received on 15 November 2024 would be outside section 73(2), and a point worth taking in the reply.
Penalty and the exit options
Illustration: unpaid tax of Rs. 5,00,000. Penalty on an adjudicated order is the higher of 10% (Rs. 50,000) and Rs. 10,000, so Rs. 50,000. For unpaid tax of Rs. 60,000, 10% is Rs. 6,000, so the Rs. 10,000 floor applies. In both cases interest under section 50 is extra.
If you pay tax and interest within 30 days of the notice, no penalty is payable and the proceedings on that notice are concluded; you intimate the payment in DRC-03 and receive DRC-05. Before the notice, paying on your own ascertainment, or on the officer's ascertainment communicated in Part A of DRC-01A, stops the notice for the amount paid. If the officer thinks the payment is short, he can issue a notice for the shortfall.
Two cautions from the material. DRC-01A pre-notice communication is now optional for the officer ("may", after Notification 79/2020-CT), and you should not admit liability in a hurry; mark pre-notice talks "without prejudice". And penalty under section 73(9) is payable regardless of the exit options where self-assessed tax or tax collected has not been paid within 30 days of its due date (section 73(11)).
If you paid through DRC-03 and a demand is also raised in the ledger, DRC-03A can link the payment to the demand, but only if DRC-05 has not already been issued.
How to use the time limits in a defence
- Identify the financial year and the annual return due date for it.
- Compute the three-year order deadline, allowing for any notified extension.
- Check the notice was issued at least three months earlier.
- Check the notice itself: the order cannot go beyond the grounds in the notice (see section 75(7)).
- Check the issuing officer's monetary limit: the material records Superintendent up to Rs. 10 lakh of CGST, Deputy or Assistant Commissioner above Rs. 10 lakh up to Rs. 1 crore, and Additional or Joint Commissioner above Rs. 1 crore (Circular 31/05/2018-GST).
Need help with a section 73 notice?
A DRC-01 with a tight timeline needs the dates checked before any reply is filed. Our team can test the limitation, reconcile the demand and draft the reply and personal hearing submissions through GST notices and litigation. If the dispute started with a return mismatch, a GSTR-1 vs 3B mismatch review may close the issue earlier.
Key takeaways
- Section 73 is for non-fraud demands for periods up to FY 2023-24 only.
- Order within 3 years of the annual return due date; notice at least 3 months earlier.
- FY 2017-18, 2018-19 and 2019-20 have notified extensions; later years have none listed in the material.
- Penalty is 10% of tax or Rs. 10,000 (higher); nil if tax and interest are paid before the notice or within 30 days.
- Always test limitation and the grounds of the notice before replying on merits.
Read next
- The GST Demand Limitation Map: Sections 73, 74 and 74A
- Section 74: Fraud, Suppression and the Penalty Slabs
- Section 73 vs Section 74: Key Differences in GST Demands
- Compounding of GST Offences: Section 138 and Rule 162
Disclaimer: Positions stated as on 30 September 2026, based on the CGST and IGST Acts and Rules as amended, the Finance Act 2026, and the ICAI Background Material on GST (14th Edition, July 2026). Verify current notifications before acting.