Section 40 – First Return

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Section 40 of CGST Act, 2017 – First Return

Updated on: February 2026 (as applicable till date)
Prepared by: Yours Tax Consultant

1. Scope and Purpose of Section 40

Section 40 deals with the concept of first return under GST. It applies to persons who are:

  • Newly registered under GST, or
  • Granted registration with retrospective effect

This section ensures that tax liability for the period prior to registration is properly disclosed and paid.

2. Statutory Provision – Section 40

Section 40:
Every registered person who has made outward supplies during the period between the date on which he became liable to registration till the date on which registration has been granted shall declare the details of such supplies in the first return furnished by him after grant of registration.

3. When is Section 40 Applicable?

Section 40 becomes applicable when:

  • A person crosses the threshold limit under Section 22, but
  • Registration is granted at a later date

The gap period between:

  • Date of liability to register, and
  • Date of grant of registration

is covered under Section 40.

4. What is “First Return”?

The first return means:

  • The first return furnished under Section 39
  • After GST registration is granted

Currently, this return is:

  • GSTR-3B

Section 40 does not prescribe a separate return form.

5. Supplies to be Declared in First Return

The first return must include:

  • All outward supplies made during the gap period
  • Tax payable on such supplies

This applies even if:

  • Invoices were issued without GST, or
  • Tax was not collected from customers

6. Interaction with Section 31 (Revised Invoice)

Where registration is granted with retrospective effect:

  • Revised invoices may be issued under Section 31
  • Such invoices support declaration in first return

Thus, Sections 31 and 40 operate together.

7. Tax Payment and Interest Implication

Tax on supplies declared in first return:

  • Must be paid along with the return
  • Interest under Section 50 may apply

Delay in registration often leads to:

  • Tax outflow without ITC benefit
  • Interest and penalty exposure

8. Section 40 Read with Section 39

Section 40 is not an independent return provision.

It must be read with:

The disclosure is made within the return framework of Section 39.

9. Common Practical Issues

  • Ignoring supplies made before registration grant
  • Non-issuance of revised invoices
  • Mismatch between first return and GSTR-1
  • Departmental demand during audit

10. Related Provisions

11. Professional Tip

Always analyse the gap period between liability and registration. Section 40 disclosures are frequently picked up in audit and can result in tax and interest if missed.

Disclaimer: This article is prepared based on the CGST Act, CGST Rules, notifications and prevailing legal position as applicable till date. Future amendments or judicial pronouncements may require revision.

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