Reviewed through: 12 August 2026

Finin2min Summary

  • Section 74A is the unified GST demand provision for Financial Year 2024–25 onward; the fraud/non-fraud distinction largely shifts to penalty consequences rather than choosing section 73 versus 74.
  • The notice limitation is generally 42 months from the due date for furnishing the annual return for the relevant financial year, or from the date of erroneous refund in the refund limb.
  • The proper officer must generally issue the order within 12 months from the date of issue of the notice.
  • The order period can be extended under the statutory mechanism by up to the permitted additional period; current Finin2min statutory controls track a maximum six-month extension with recorded reasons/approval under the provision.
  • Never calculate limitation from the date of scrutiny notice, audit start, DRC-01A or the taxpayer's reply unless the statute specifically makes that date relevant.
  • Annual-return due dates can be extended. A limitation working should therefore preserve the actual legally applicable due date, including any valid extension.
  • DRC-01 is an electronic summary; it should not be confused with the complete statutory show-cause notice.

The Two-Minute Answer

For FY 2024–25 onward, limitation analysis should begin with a controlled date sheet.

For an ordinary annual-return-linked demand:

SCN outer date = applicable annual-return due date + 42 months

Then:

Order outer period = notice date + 12 months, subject to exclusions, stays and any valid statutory extension.

This is deceptively simple. The hard part is identifying the correct base date, the correct financial year, any extension, and whether court/tribunal stay periods or other statutory rules affect the clock.

Why Section 74A Changed the Old 73/74 Workflow

For earlier years, practitioners were trained to ask whether the case was “fraud” or “non-fraud” because sections 73 and 74 had separate routes and limitation structures.

For FY 2024–25 onward, section 74A provides the principal unified demand machinery for tax not paid/short paid, erroneous refund and ITC wrongly availed or utilised. The reason for the default still matters—especially for penalty—but the core provision is no longer selected by simply choosing 73 or 74 based on fraud.

Step 1 — Identify the Financial Year

Do not apply section 74A mechanically to FY 2023–24 or earlier. First create a line item for the period of demand.

If one notice spans several years, split the limitation analysis year by year because the applicable provisions and base dates can differ.

Step 2 — Identify the Statutory Base Date

For the annual-return-linked limb, capture the due date for the annual return for that financial year.

Use a field called:

Annual return due date legally applicable for limitation

Do not populate it with:

  • actual GSTR-9 filing date;
  • date of audit;
  • date of ASMT-10;
  • date of DRC-01A;
  • date of investigation summons;
  • date tax officer downloaded data.

If the Government validly extended the annual-return due date, document the notification/order and use the legally applicable date as required by the provision.

For erroneous refund cases, separately capture the refund-related statutory base date.

Step 3 — Add 42 Months

Use a date function, not “3.5 years” typed manually.

Illustrative example only

Assume, solely for illustration, the legally applicable annual-return due date is 31 December 2025, with no extension.

Adding 42 calendar months produces an outer date around 30 June 2029 because the target month does not contain a 31st day. Actual computation must follow the applicable legal date-counting rule and system.

The purpose of the example is to show why a spreadsheet should use a real month-add function and then be independently reviewed.

Step 4 — Record the Actual Notice Date

The statutory clock for the order is linked to the date of issue of the notice. Preserve:

  • signed notice PDF;
  • document identification number, where applicable;
  • portal communication;
  • issue date;
  • service evidence;
  • DRC-01 summary;
  • annexures.

A portal summary without the underlying notice should be escalated.

Step 5 — Calculate the 12-Month Order Period

The order should be issued within the statutory 12-month period from the notice, subject to the provision.

Do not use the SCN's 42-month outer date as the order date. The 42-month clock controls notice issuance; once a notice is issued, the order clock is a separate second stage.

Step 6 — Test Exclusions and Extensions

A professional limitation memo should contain a separate row for:

  • court/tribunal stay period;
  • any statutory exclusion;
  • extension order/approval;
  • recorded reasons;
  • start/end dates excluded;
  • revised outer date;
  • evidence URL/document.

Never add six months automatically. The extension is a statutory power subject to its conditions, not a default cushion for the department.

DRC-01A, DRC-01 and the SCN

DRC-01A

The rules may permit a pre-notice communication. It is not automatically the statutory show-cause notice.

Statutory SCN

This is the legal notice setting out the demand allegations and basis.

DRC-01

This is the electronic summary accompanying the notice in the prescribed system.

A limitation defence should identify exactly which document is alleged to be the section 74A notice.

Limitation Working Template

Field Value Evidence
Financial year FY … Return/ledger
Demand type tax / ITC / refund SCN
Section 74A SCN
Annual-return due date DD-MM-YYYY notification/rule
Erroneous-refund date, if relevant DD-MM-YYYY refund order
42-month outer date DD-MM-YYYY computation
SCN issue date DD-MM-YYYY signed SCN
SCN service date DD-MM-YYYY portal/email
12-month order outer period DD-MM-YYYY computation
Stay/exclusion … court order
Extension … statutory approval
Final limitation conclusion within / potentially barred reviewer memo

Worked Scenario: Why Base-Date Errors Matter

Suppose a taxpayer files its annual return late. An analyst mistakenly adds 42 months to the actual filing date, which is later than the statutory due date.

That can artificially give the department more time than the statute provides.

Conversely, using an original due date where a valid Government extension changed the legally applicable due date can understate the time.

The correct base date must be sourced—not guessed.

Common Errors

  • Applying section 73/74 logic to FY 2024–25 onward without checking section 74A.
  • Measuring 42 months from actual annual-return filing.
  • Treating DRC-01A as the SCN.
  • Treating DRC-01 summary as the complete notice.
  • Forgetting the separate 12-month order clock.
  • Automatically adding a six-month extension.
  • Ignoring a court stay.
  • Combining multiple financial years into one limitation row.
  • Using a spreadsheet formula without preserving the source date.

Practical Checklist

  • [ ] FY split completed.
  • [ ] Section 74A applicability confirmed.
  • [ ] Demand limb identified.
  • [ ] Correct statutory base date sourced.
  • [ ] Extension to annual-return due date checked.
  • [ ] 42-month date independently calculated.
  • [ ] Actual signed SCN obtained.
  • [ ] DRC-01/DRC-01A distinguished.
  • [ ] 12-month order period calculated.
  • [ ] Stay/exclusion/extension tested.
  • [ ] Limitation memo signed off before merits response.

Article-Specific Q&A

Does section 74A apply to FY 2023–24?

The section 74A framework is for FY 2024–25 onward. Earlier years require the earlier demand provisions and transition analysis.

Is the SCN deadline three years?

No. The current section 74A notice rule uses 42 months from the prescribed base date.

Does the order also get 42 months?

No. The order has a separate 12-month-from-notice framework, subject to the Act.

Can the order period be extended?

The statute contains an extension mechanism subject to conditions. Do not assume an automatic extension.

Is DRC-01 the legal notice?

DRC-01 is the electronic summary. Review the underlying statutory show-cause notice and annexures.

What date should a taxpayer save first?

The legally applicable annual-return due date for the relevant financial year, plus the source that establishes it.

Official Sources

Relevant Finin2min Links

Finin2min Review Trigger

Refresh after any amendment to section 74A/related rules, annual-return due-date extension, judicial decision on date computation, or change to DRC forms.

Disclaimer

Limitation can determine substantive legal rights and is highly fact-sensitive. This guide is educational. Obtain professional legal/tax advice on the actual notice, dates, extensions, stays and applicable law.