1. Why Section 40 matters
People searching for “Section 40 CGST Act”, “first GST return after registration”, “GST return for period before registration”, “backdated GST registration”, or “what happens to sales before GST registration certificate” are dealing with the exact compliance issue addressed by Section 40.
Section 40 is short, but it solves an important practical problem. A person may become liable to registration on one date, apply for registration, and receive the registration certificate on a later date. During that interval, outward supplies may have been made. Section 40 requires those supplies to be brought into the first return furnished after registration is granted.
2. What Section 40 says
Section 40 of the CGST Act is titled “First Return.” It provides that every registered person who has made outward supplies during the period beginning with the date on which the person became liable to registration and ending with the date on which registration was granted must declare those outward supplies in the first return furnished after registration.
| Event | Section 40 treatment |
|---|---|
| Person becomes liable to registration | Registration liability begins according to the applicable provision, such as Section 22 or Section 24. |
| Application for registration | The application process under Section 25 determines registration grant/effective-date issues. |
| Registration granted later | A gap may exist between liability and grant. |
| Outward supplies made during gap | These supplies must be declared in the first return after registration. |
3. Complete statutory meaning
The operative concept can be stated in three parts:
- the person is a registered person;
- the person made outward supplies between the date on which the person became liable to registration and the date on which registration was granted; and
- those outward supplies must be declared in the first return furnished after registration.
Section 40 is therefore a bridging provision. It connects the period of actual registration liability with the formal grant of registration and ensures that taxable outward supplies made during the intervening period enter the GST return system.
4. Liability date vs registration grant date
This is the most important concept for understanding Section 40.
| Date | Meaning |
|---|---|
| Date liable to registration | The date on which the person crosses the applicable threshold or otherwise becomes compulsorily liable under the GST law. |
| Date of registration application | The date on which the person submits the registration application. |
| Date registration is granted | The date on which the registration is actually granted through the GST registration process. |
| Effective date of registration | The date from which registration is legally effective as stated/recognised under the registration framework. |
These dates should be captured separately in the registration working paper. A single “GST registration date” field in an ERP can be insufficient for compliance analysis.
5. Which period is covered?
The statutory window is:
Date on which the person became liable to registration.
Date on which registration was granted.
Only outward supplies made within this bridge period are the specific subject of Section 40.
Example
A business becomes liable to registration on 10 June. It applies for registration and receives the registration certificate on 25 June. Taxable outward supplies made from 10 June through 25 June fall within the Section 40 reporting concept, subject to the actual registration/effective-date facts and applicable invoice rules.
6. What is the first GST return?
Section 40 does not create a new standalone return form called “First Return”. It requires the relevant supplies to be included in the first return that the registered person is required to furnish after registration.
For an ordinary regular taxpayer, this will generally be the first applicable GSTR-3B return, together with the corresponding outward-supply reporting through GSTR-1 where required.
The exact return period and filing form should be determined under Section 39 and the Rules applicable to the taxpayer.
7. Invoicing during the gap period
Section 40 is about return reporting; it should not be read in isolation from Section 31 and the Invoice Rules.
Where a person becomes liable to GST and subsequently obtains registration, the business should review all outward supplies during the intervening period and determine:
- taxability;
- place of supply;
- tax rate;
- tax invoice requirements;
- invoice numbering;
- e-invoicing applicability, where relevant;
- e-way bill requirements, where relevant; and
- correct reporting in GSTR-1 and GSTR-3B.
8. Section 40 and GSTR-1
Section 40 expressly deals with declaration of outward supplies in the first return. In practice, detailed outward-supply information is furnished through the GSTR-1 framework under Section 37 and the applicable Rules.
Therefore, a newly registered taxpayer should ensure that the pre-registration-grant supplies covered by Section 40 are consistently reflected in:
- sales register;
- tax invoices;
- GSTR-1/outward-supply reporting;
- GSTR-3B liability; and
- books and GST liability ledger.
9. Section 40 and GSTR-3B
For a regular taxpayer, the first GSTR-3B should include the tax liability arising from the outward supplies that Section 40 requires to be declared.
| Working | Control |
|---|---|
| Sales from liability date | Identify all outward supplies from the liability date. |
| Tax calculation | Apply the correct rate and place-of-supply treatment. |
| Invoice reporting | Ensure the invoices are correctly reported in the outward-supply return. |
| GSTR-3B | Reconcile the corresponding output tax liability. |
| Payment | Pay the tax within the applicable statutory timeline. |
10. Tax liability in the first return
The first-return working should not merely total invoices issued after the GSTIN was received. It should identify the legally relevant period and supplies covered by Section 40.
A professional first-return schedule should contain:
| Field | Purpose |
|---|---|
| Supply date | Establishes the transaction period. |
| Invoice number/date | Supports statutory reporting. |
| Customer GSTIN | Determines B2B reporting where applicable. |
| Place of supply | Determines CGST/SGST/UTGST or IGST treatment. |
| Taxable value | Determines tax base. |
| Tax rate | Determines tax amount. |
| Tax amount | Reconciles to GSTR-3B. |
| Section 40 flag | Identifies transactions from the liability-to-grant bridge period. |
11. Section 40 and ITC
Section 40 itself deals with outward supplies. It does not independently grant input tax credit on purchases made during the pre-registration period.
ITC for stock and capital goods in special registration circumstances is governed principally by Section 18 and the relevant Rules. The business should therefore keep the Section 40 outward-supply schedule separate from the Section 18 ITC schedule.
12. Backdated registration
GST registration can have an effective date that precedes the date on which the certificate is actually granted, depending on the registration facts and applicable provisions.
Where the effective registration date is earlier than the certificate-grant date, the taxpayer should carefully distinguish:
- the legal effective date;
- the date the registration certificate was generated/granted;
- the date the person became liable; and
- the actual supply dates.
Section 40 specifically addresses supplies made between liability and grant. Other supplies falling within an earlier effective registration period may be governed directly by the ordinary registered-person return/invoice provisions.
13. Voluntary registration
Section 25(3) permits voluntary registration. In a voluntary-registration case, the exact Section 40 bridge should be analysed carefully because the statutory concept is tied to the date on which the person became liable to registration.
If a person was not otherwise liable to register and voluntarily registers, the business should not automatically assume that every supply made before the registration effective date falls under Section 40. The registration order, effective date and Section 25(3) consequences should be examined.
14. Late application for registration
Where a person becomes liable to registration but does not apply within the prescribed time, the business can face consequences under the registration and demand provisions in addition to the first-return requirement.
The first-return working should therefore capture:
- date liability arose;
- date application was made;
- date registration was granted;
- effective date in the registration order;
- supplies during the gap; and
- tax/interest implications arising from delayed compliance, where applicable.
15. Amendments and effective date
Changes in the principal place of business, constitution, authorised signatory or other registration particulars do not normally change the Section 40 concept by themselves.
However, if the registration order is amended or the effective date is corrected, the first-return working should be revisited to ensure that the period covered by Section 40 remains accurate.
16. Cancellation after first return
Cancellation of registration does not erase tax liabilities for the period during which the person was liable or registered. Section 29 expressly preserves liabilities incurred before cancellation.
Therefore, if a newly registered taxpayer later cancels the GSTIN, the Section 40 period and the first-return liability should remain fully documented.
17. Insolvency / CIRP example
A useful practical example comes from corporate insolvency. Where a corporate debtor obtains a new GST registration during CIRP under the prescribed framework, the new registration may require a first return covering the period beginning from the date on which the new registration liability arose and ending with the registration grant.
CBIC Circular 134/04/2020-GST specifically addressed the first return under Section 40 in the context of a corporate debtor undergoing CIRP and a new registration being obtained for the insolvency period. citeturn1search4
18. Detailed practical examples
Example 1 — threshold crossed before registration grant
A business crosses the registration threshold on 5 August. It applies on 12 August and registration is granted on 20 August. Taxable outward supplies made in the statutory bridge period are identified and included in the first return.
Example 2 — B2B sales during the gap
A supplier makes B2B supplies after becoming liable but before the GSTIN is granted. The invoices and customer details are preserved so that the supplies can be reported correctly after registration.
Example 3 — B2C sales
A retailer makes B2C supplies during the bridge period. The sales register separately flags those transactions so the appropriate outward-supply reporting can be completed.
Example 4 — inter-State supply
A business makes an inter-State taxable supply during the relevant period. Place-of-supply analysis and IGST treatment are completed before the first return is filed.
Example 5 — effective date earlier than certificate grant
The registration order records an effective date earlier than the certificate generation date. The business maps transactions against the legal effective date and separately identifies the Section 40 bridge period.
Example 6 — delayed application
A person becomes liable on 1 April but applies on 20 April. The tax team reconstructs all taxable supplies from 1 April and evaluates tax and interest consequences rather than starting only from the application date.
Example 7 — voluntary registration
A small business voluntarily registers even though it is below the threshold. It reviews Section 25(3) and the registration order rather than assuming Section 40 automatically covers all earlier sales.
Example 8 — cancellation soon after registration
A newly registered taxpayer later discontinues business. Cancellation does not erase the first-return liability or earlier tax obligations.
Example 9 — CIRP registration
A corporate debtor obtains a fresh registration for the CIRP period. The first return is prepared with the Section 40 bridge-period requirement in mind.
Example 10 — construction contractor
A contractor crosses the threshold while executing a project. RA bills issued between the liability date and registration grant date are separately identified, taxed and included in the first return.
19. Construction and infrastructure examples
Section 40 is particularly important when a construction, mining, irrigation, road or infrastructure contractor crosses the registration threshold while a project is already active.
| Transaction | Control |
|---|---|
| RA bill issued after liability date | Flag for Section 40 first-return schedule. |
| Mobilisation advance | Review time-of-supply rules and whether GST became payable during the relevant period. |
| Retention amount | Determine GST timing separately; do not automatically equate accounting recognition with tax timing. |
| Subcontractor costs | Keep Section 18 ITC analysis separate from Section 40 outward-supply reporting. |
| Inter-State project | Verify place of supply and IGST treatment. |
| Multiple project sites | Map each outward invoice to the correct GST registration. |
A strong first-return working for a project business should reconcile contract billing register → invoice register → Section 40 schedule → GSTR-1 → GSTR-3B → tax payment.
20. Legislative development
| Period | Development |
|---|---|
| 1 July 2017 | Section 40 came into force with the CGST Act and established the first-return rule. |
| GST return reforms | The operational return forms evolved, but the first-return principle remained tied to the statutory wording. |
| 2020 CIRP clarification | CBIC Circular 134/04/2020-GST expressly addressed first-return filing for new registrations during CIRP. |
| Current framework | Section 40 operates together with Sections 22, 24, 25, 31, 37 and 39 and the applicable Registration/Invoice/Return Rules. |
21. Legal authorities to check
This article intentionally does not embed external reference hyperlinks. For a transaction-date-specific review, check:
| Authority | Why it matters |
|---|---|
| Section 22 | When threshold-based registration liability arises. |
| Section 24 | Compulsory registration categories. |
| Section 25 | Application, effective date, grant and voluntary registration. |
| Section 31 | Tax invoice and related document requirements. |
| Section 37 | Outward-supply reporting. |
| Section 39 | Return filing and first-return mechanism. |
| Section 50 | Interest where delayed tax payment is involved. |
| Registration Rules | Application, verification and grant/effective-date procedure. |
| Invoice Rules | Invoice timing and particulars. |
22. Professional workflow
Document why registration became compulsory.
Keep ARN and application evidence.
Preserve registration order/certificate.
Do not assume it equals the certificate generation date.
Identify every outward supply from liability to grant.
Determine taxable/exempt/zero-rated status.
Determine CGST/SGST/UTGST or IGST.
Check invoice timing and particulars.
Keep the bridge-period transactions separately identifiable.
Ensure outward reporting is complete.
Match output tax liability.
Keep registration order, invoices, return and tax-payment evidence.
23. Internal controls
| Control | Purpose |
|---|---|
| Registration-liability tracker | Identifies the exact date on which registration became necessary. |
| Application tracker | Records ARN, application date and status. |
| Registration-order archive | Preserves grant and effective-date evidence. |
| Pre-registration sales report | Captures all outward supplies during the Section 40 bridge period. |
| Invoice numbering control | Prevents omission or duplication of invoices. |
| GSTR-1 reconciliation | Confirms outward supplies are correctly reported. |
| GSTR-3B reconciliation | Confirms tax liability agrees with detailed reporting. |
| Tax-payment reconciliation | Confirms liability is discharged. |
24. Common mistakes
- Starting GST reporting only from the certificate-generation date.
- Ignoring the date on which the person actually became liable to registration.
- Failing to identify supplies made during the liability-to-grant period.
- Confusing the registration application date with the effective registration date.
- Assuming Section 40 creates a separate return form.
- Ignoring Section 31 invoice requirements during the bridge period.
- Reporting Section 40 outward supplies in GSTR-3B but failing to reconcile GSTR-1.
- Mixing Section 40 outward-supply reporting with Section 18 special ITC.
- Ignoring interest where tax was required to be paid late.
- Failing to preserve the registration order and first-return working.
25. Section 40 GST FAQs
What is Section 40 of the CGST Act?
Section 40 deals with the first return of a newly registered person and requires outward supplies made between the date the person became liable to registration and the date registration was granted to be declared in that first return.
What is the first return under GST?
Section 40 does not create a separate form called “First Return”. It requires the relevant supplies to be included in the first return that the registered person is required to furnish after registration.
What happens to sales made before GST registration is granted?
If the supplies fall within the Section 40 period—between the liability date and the registration-grant date—they must be declared in the first return after registration.
Can GST registration be granted after the liability date?
Yes. The application and registration process can create a gap between the date liability arose and the date registration was granted. Section 40 addresses outward supplies made during that gap.
Does Section 40 apply to voluntary registration?
Care is required. Section 40 specifically refers to the date on which the person became liable to registration. A voluntary registrant should be analysed under Section 25(3) and the registration order rather than automatically treating all earlier supplies as Section 40 supplies.
Which return contains Section 40 supplies?
For a regular taxpayer, the relevant outward supplies are generally reflected through the GSTR-1 and the tax liability is reported through the applicable GSTR-3B framework.
Does Section 40 apply to purchases?
No. Section 40 specifically deals with outward supplies. Special ITC for stock/capital goods in registration circumstances is primarily governed by Section 18 and the applicable Rules.
What is the difference between liability date and registration date?
The liability date is when the law requires registration; the grant date is when the registration is actually granted. The effective date shown in the registration order is a separate point that must also be checked.
What if registration is backdated?
Review the registration order and effective date carefully. Supplies falling within the effective registration period and the specific liability-to-grant bridge should be mapped separately before filing returns.
Does Section 40 require tax payment?
Section 40 requires the relevant outward supplies to be declared. The resulting tax liability must then be discharged under the applicable return and payment provisions.
What records should be maintained?
Maintain the liability calculation, registration application/ARN, registration order, effective date, bridge-period sales register, invoices, GSTR-1, GSTR-3B, payment evidence and reconciliation working.
Does Section 40 apply to a company during CIRP?
It can. CBIC Circular 134/04/2020-GST specifically discussed the first return under Section 40 for a corporate debtor obtaining a new registration during CIRP.
27. Key takeaways
- Section 40 is the GST “first return” provision.
- It covers outward supplies made between the date a person became liable to registration and the date registration was granted.
- Those supplies must be declared in the first return after registration.
- Do not confuse liability date, application date, grant date and effective registration date.
- Section 40 deals with outward supplies; special registration-related ITC is principally a Section 18 issue.
- For regular taxpayers, the practical reporting chain is GSTR-1 plus GSTR-3B.
- Construction and infrastructure businesses should maintain a separate bridge-period billing schedule.
- Registration documents and the first-return working should be retained as permanent compliance evidence.
Reference policy: This article intentionally does not embed external reference hyperlinks. Legal authorities are identified by Act section, Rule, circular and notification so the page remains clean and avoids unreliable links.
Disclaimer: This guide is for practical educational and working purposes. GST legislation, Rules, notifications and portal functionality can change. Verify the law applicable to the relevant tax period before relying on this article for a compliance, assessment or litigation decision.