First GST Return – Section 40 of GST

The GST framework mandates compliance from registered taxpayers, including the filing of various returns. One crucial aspect for newly registered taxpayers is Section 40 of the CGST Act, which deals with the First GST Return. This provision ensures that all outward supplies made between the date of liability and the date of registration grant are accurately reported.

In this blog, we will discuss the applicability, significance, and compliance requirements of Section 40 of the CGST Act.

What is Section 40 of the CGST Act?

Section 40 of the CGST Act, 2017 states:

Every registered person who has made outward supplies in the period between the date on which he became liable to registration till the date on which registration has been granted shall declare the same in the first return furnished by him after grant of registration.

This means that if a taxpayer has conducted business and made outward supplies before obtaining GST registration but after becoming liable to register, those transactions must be reported in the first return filed after receiving the GST registration certificate.

Who Needs to File the First GST Return?

Any person who has applied for GST registration and has started making outward taxable supplies before receiving the registration certificate must file a first return under Section 40. This applies to:

• Businesses crossing the threshold limit for GST registration.

• Voluntary registrants who made supplies before obtaining registration.

• Entities shifting from the unregistered to the registered category.

Why is the First GST Return Important?

Filing the first return ensures:

1. Tax Compliance – Helps businesses adhere to GST regulations and avoid penalties.

2. Seamless ITC Claim – Purchasers of goods/services can claim Input Tax Credit (ITC) based on valid tax invoices.

3. Accurate Tax Reporting – Ensures all transactions during the pre-registration period are captured in the GST system.

How to File the First Return?

Step 1: Determine the Liability Period

• Identify the date when your business became liable for GST registration.

• Check the date when the GST registration was granted.

• The period between these two dates is the pre-registration supply period.

Step 2: Maintain Records of Outward Supplies

• Keep records of invoices issued during this period.

• Ensure compliance with GST invoicing rules (mention GSTIN once received).

Step 3: Report Outward Supplies in First Return

• Declare all supplies made in the pre-registration period in GSTR-1 (Details of Outward Supplies).

• Ensure consistency with GSTR-3B (Summary Return) filings.

Step 4: Pay GST Liability (If Applicable)

• If tax was not collected from customers before registration, businesses must pay the GST amount from their own funds.

• Claim Input Tax Credit (ITC) for eligible purchases made during this period.

Due Date for Filing the First GST Return

The first return must be filed in the tax period immediately after registration is granted. However, the GST portal does not have a separate form for first returns—taxpayers need to report such supplies in the first GSTR-1 and GSTR-3B filed post-registration.

Consequences of Non-Compliance

Failing to report pre-registration outward supplies in the first return may lead to:

• Penalty and Interest: Non-disclosure of taxable supplies can attract interest and penalties under the CGST Act.

• ITC Reversal for Buyers: If not reported, buyers who claimed ITC on these transactions may face ITC disallowance.

Conclusion

Section 40 of the CGST Act plays a critical role in ensuring that taxable supplies made during the pre-registration period are properly declared. Timely and accurate filing of the first return helps businesses stay compliant and prevents future tax disputes.

For smooth compliance, businesses should maintain proper records and report all relevant transactions in their first return filed after GST registration.

Need help with GST registration and return filing? Contact us at +91 9769647582 to ensure seamless compliance with GST laws!