GlossaryCMPWhat is Show Cause Notice?
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What is Show Cause Notice?

A show-cause notice (SCN) is a formal notice asking a taxpayer to explain why a proposed tax demand, penalty or action should not be taken.

Bare Law Reference: Section 73/74, CGST Act; Income-tax Act.

Detailed Explanation

How it works

Under GST it is issued in DRC-01 (Section 73/74); under income tax through various sections. A timely, documented reply and a request for a personal hearing are essential.

Frequently asked questions

What is a show-cause notice?

A formal notice requiring the taxpayer to explain why a proposed demand or action should not be taken.

How should I respond to an SCN?

With a point-wise, documented reply within the deadline, and a request for a personal hearing.

This content is for general guidance only and does not constitute professional advice. Tax law changes frequently — verify the current position and consult a qualified Chartered Accountant before acting. Last reviewed: June 2026.

Key Takeaways

  • An SCN asks you to justify against a proposed action.
  • GST SCN is issued in DRC-01.
  • Reply on time with documents and seek a hearing.