Tax & GST Compliance

High-Value Transaction Notice or GST Mismatch? A Practical Response Guide for Kerala Taxpayers

Identify your notice, reconcile the figures and prepare a documented response. A practical guide to AIS alerts, GST mismatches and appeal checks, with support through Manjeri and Calicut.

NRS Editorial Desk · Published 2026-09-22 · 14 min read

Received a high-value transaction message or GST mismatch notice? First identify the communication, confirm it on the official portal and record its deadline. Then reconcile the reported figures with your records and submit the appropriate response with supporting evidence. An AIS entry is not automatically taxable income, and a GST mismatch is not automatically a final tax demand.

For individuals and businesses in Calicut, Manjeri and across Malappuram district, the immediate question is usually practical: “What do I reply, where do I reply, and which documents will explain the difference?” This guide helps you organise that response, distinguish common GST forms, and recognise when an assessment or appeal needs separate attention.

Start here: which communication have you received?

Do not choose a response process from the email subject alone. Download the complete communication and its attachments from the relevant portal.

Does a high-value transaction mean additional income tax is payable?

No. Reporting a transaction and taxing income are different questions. A property transaction, deposit or investment can appear in reported information without the entire transaction value becoming taxable income. Its nature, source, ownership, relevant year and treatment in the return must be examined.

For example, a property sale requires a capital-gains examination rather than an assumption that the entire bank credit is profit. A loan receipt needs evidence of the loan and its source; simply describing a credit as a loan does not establish the explanation.

The Income-tax Department receives information from specified reporting entities through mechanisms including the Statement of Financial Transactions. AIS brings together reported information and provides a feedback facility. Check it alongside the return and your own records. Department AIS FAQs

Common SFT thresholds: understand the year before using the table

The following examples are from the Department's Rule 114E / Income-tax Act, 1961 reporting guidance, relevant when examining transactions under that framework. Do not automatically apply an old rule number to a tax year governed by the 2025 Act and 2026 Rules.

These are reporting thresholds, not tax-free allowances or a guarantee that smaller transactions will never be examined. Aggregation and reporting-entity rules matter. Official SFT guide

How to respond to an AIS mismatch or high-value transaction message

1. Authenticate the communication

Open the official income-tax portal directly. Check the communication against your account and use the Department's notice-authentication service where applicable. Record the reference number, year, date and requested action. Official notice services

2. Identify the exact reported entry

Note the reporting entity and transaction amount. Compare AIS, Form 26AS, the filed return, relevant bank statements and the underlying document. A summary total is not enough when several entries contribute to the difference.

The Department's current AIS FAQs describe access through the AIS menu on the dashboard or through e-File → Income Tax Return → View AIS, followed by the feedback option for the relevant information. Follow the options currently displayed for your communication. Department AIS feedback FAQs

3. Explain both the nature and movement of funds

Build a document trail: where the funds originated, when they moved, who owned them, why they were received and how they were treated in the return.

These are preparation suggestions, not a promise that a particular document will settle a case. Foreign remittances, gifts and joint ownership require analysis of the facts; the label used in a bank narration is not conclusive.

4. Submit accurate feedback and separately review the return

Use the available feedback category that matches the facts. If reporting is wrong, retain evidence and follow up with the reporting entity where appropriate. If the return omitted taxable income, assess the available correction route and its eligibility separately. AIS feedback does not itself amend an already-filed return. The Department explains that feedback affects displayed/processed information and return prefilling. Department AIS feedback guidance

5. Retain a submission record

Keep the response, attachments, acknowledgement and a note of the next action. A submitted response is not the same as a communication being closed. Check for subsequent queries.

A practical reconciliation example: explain the difference, not just the total

Illustrative example—not an NRS client case: A taxpayer sees a ₹12 lakh reported transaction and believes only ₹9 lakh relates to the relevant underlying activity. A useful response needs more than “the figure is incorrect”.

The purpose of the schedule is to isolate what must be proved. It does not establish that ₹9 lakh is taxable or that ₹3 lakh can be ignored. If the evidence does not support a proposed explanation, revise the explanation rather than forcing the numbers to agree.

What changes if the case moves to a faceless assessment?

The focus shifts to answering the specific statutory notice and any proposed adjustment. Organise submissions by the notice's numbered questions. For each point, set out the fact, amount, explanation and supporting attachment.

The e-Proceedings service supports electronic responses to departmental notices and communications. Where the applicable proceeding permits a video hearing, use the prescribed request facility; do not assume that emailing an officer requests a hearing. Department e-Proceedings guidance, video-conferencing guidance

If records cannot be collected in time, examine the appropriate adjournment procedure before the deadline. A request is not proof that extra time has been granted. Preserve portal acknowledgements and technical-error records if a filing problem occurs.

Which Income-tax Act applies after 1 April 2026?

The Income-tax Act, 2025 took effect on 1 April 2026, but the date a notice arrives does not by itself determine the governing Act. Section 536 preserves the old framework for relevant proceedings concerning tax years beginning before that date, including proceedings initiated later.

Therefore, an earlier-year matter may still require the 1961 Act's sections and procedures. Confirm the relevant year before selecting the response or appeal form. Department transition guidance

GST reconciliation: what should you compare?

GST reconciliation compares books, returns and portal information to explain differences and assess whether corrective action is needed. Prepare it period by period and GSTIN by GSTIN, rather than combining unrelated registrations.

Matching a purchase invoice to GSTR-2B does not complete the ITC eligibility review. Conversely, a difference should be investigated before treating the entire amount as payable. The documentary and statutory basis for credit matters as well as numerical agreement.

DRC-01B: GSTR-1 versus GSTR-3B liability

Rule 88C provides for an intimation where the relevant outward-liability difference exceeds the prescribed trigger. It directs the taxpayer to pay the differential amount with applicable interest and/or explain the difference within seven days, using the prescribed Part B response.

Check whether the figures compare the same tax period and whether earlier payments or amendments explain any part. If payment is appropriate, ensure its details are properly reflected in the required response; do not treat payment alone as completion of every portal step. Notification 26/2022—Rule 88C and DRC-01B

DRC-01C: GSTR-3B versus GSTR-2B ITC

Rule 88D addresses the specified excess of ITC claimed in GSTR-3B over the GSTR-2B information. The intimation provides a seven-day response framework: explain the difference and/or provide the appropriate payment details in Part B.

A supplier uploading late may explain a timing difference but does not, by itself, establish that the earlier credit claim was valid. Examine the conditions for that claim and any reversal or reclaim separately. Notification 38/2023—Rule 88D and DRC-01C

Failure to provide the required Part B response can restrict subsequent GSTR-1/IFF filing under the relevant compliance process. Treat this as an operational deadline as well as a tax issue. GSTN DRC-01C FAQs, GST Council DRC-01B explanation

ASMT-10, DRC-01A and DRC-01 are different stages

ASMT-10 concerns return scrutiny. The taxpayer's explanation is furnished in ASMT-11. CBIC's scrutiny procedure describes a 30-day response period or such further period as the proper officer permits. Record the actual notice deadline and seek any necessary extension through the applicable process. CBIC Instruction 02/2023-GST

DRC-01A is a pre-show-cause intimation in the applicable proceedings; DRC-01 is a summary accompanying a show-cause notice. Download the full notice and annexures. A formal reply may require DRC-06, rather than a Part B response used for a different form. Follow the notice and the current applicable procedure. GSTN's DRC-06 guidance

Do not use one deadline or a generic reply for every GST form. Similarly, do not assume that voluntary payment automatically removes interest, penalties or the need for further procedural action.

Build a GST response file an officer can follow

Use a simple response register:

Illustration: If one return shows ₹1,80,000 of liability and the comparison shows ₹1,62,000, isolate the ₹18,000 difference. Check invoices, amendments, period allocation and payment records. These numbers identify a question; they do not establish that the difference is automatically payable or merely a timing issue.

A practical attachment sequence is: notice and annexures; reconciliation; supporting returns; invoice-level evidence; relevant ledger/payment extracts; and previous submissions. Use readable filenames and a contents page. Answer disputed and admitted items separately and avoid attaching unrelated customer records.

Appeals in 2026: check the order, law and limitation together

Income-tax appeals

For applicable appeals under the 1961 Act, the Department's Form 35 guidance describes filing before JCIT(A) or CIT(A), generally within 30 days from the relevant statutory starting point. The starting point can depend on service of the demand or order. Delayed admission depends on the applicable condonation requirements; it is not automatic.

Prepare the order, demand, statement of facts, grounds, fee evidence and relevant supporting documents. Apply the transition rules before choosing forms for a 2026 proceeding. Official Form 35 manual

GSTAT appeals and the July 2026 announcement

GSTAT's official filing help identifies Form GST APL-05 for a taxpayer appeal. Check the appealable order, correct forum, applicable time limit, pre-deposit, fee and documentation before filing. GSTAT filing help

The Ministry of Finance announced on 30 June 2026 that the notified GSTAT filing deadline was extended to 31 July 2026. That date has passed as of this guide's research date. It should not be presented as the universal deadline for every GST appeal, or as proof that every delayed appeal is now impossible.

For an older order, examine the notification's coverage, communication date, applicable condonation provisions and any later case-specific direction. For a new order, calculate its limitation independently. This guide does not determine whether a particular late appeal is admissible. Official Ministry of Finance announcement

Income-tax notice and GST reconciliation support in Kerala

NRS and Associates provides income-tax, TDS and assessment support and GST compliance and advisory. The appropriate scope depends on the notice, deadline, records and stage of proceedings.

• Calicut / Kozhikode: Coordinate through the Calicut office for review of income-tax communications, business records and GST reconciliation requirements.
• Manjeri: Use the Manjeri office to discuss the records and immediate response needed.
• Malappuram district: The Malappuram service-area page explains access to the practice through Manjeri; it does not represent a separate Malappuram-town office.

For enquiries from elsewhere in Kerala, including Tirur, Kottakkal, Perinthalmanna and Nilambur, confirm the suitable office or remote coordination arrangement when contacting the team. The governing law and deadline depend on the proceeding, not the town from which an enquiry is made.

Need your communication reviewed? Contact NRS with the notice type, relevant year or GST period, response deadline and preferred office. Arrange an appropriate channel for sharing the full notice and financial records. Do not include portal passwords or OTPs in an enquiry.

The initial review can identify missing evidence, the required reconciliation and the scope of response or representation. Fees and next steps depend on the work involved; acceptance of a reply or an appeal outcome cannot be promised.

Frequently asked questions

Is an AIS high-value transaction message the same as a scrutiny notice?

No. Identify the actual communication. An AIS feedback request and a statutory notice can require different responses, even if they concern the same transaction. Check whether a separate proceeding is visible in the portal.

Can I ignore a transaction if I have already paid tax?

Do not assume payment answers the communication. Reconcile the transaction and explain the treatment with evidence through the required response route.

Can correcting AIS replace revising my ITR?

No. AIS feedback addresses reported information. Whether the filed return needs correction is a separate question, subject to the available legal route and time limits.

What is the difference between DRC-01B and DRC-01C?

DRC-01B concerns the specified outward-liability mismatch between GSTR-1/IFF and GSTR-3B. DRC-01C concerns the specified ITC difference between GSTR-3B and GSTR-2B. Review and respond to the form actually issued.

Does every GST notice allow 30 days to reply?

No. For example, the DRC-01B and DRC-01C rules provide seven-day response frameworks. Check the governing provision and deadline on the actual communication; do not borrow a deadline from a different form.

Should I pay the entire GST mismatch immediately?

First verify the comparison and supporting records. A difference may require explanation, correction, payment or a combination. Do not assume either that the whole difference is payable or that no liability exists.

Can NRS help with a notice received in Malappuram or Calicut?

You can contact NRS through its Manjeri or Calicut office to discuss the matter. Share the notice type, period and deadline so the team can assess scope and document requirements.

Can an AI-generated notice reply be submitted unchanged?

It should not be relied on without checking the actual notice, facts, figures, law and attachments. A polished generic reply can still answer the wrong question or admit an amount incorrectly. AI can help organise a draft; the taxpayer and adviser must verify the submission.