The Goods and Services Tax (GST) regime is built on the principle that every taxable supply should be reported and taxed from the moment the supplier becomes liable to register. However, in practice, there is often a gap between:
- The date a person becomes liable for registration – for example, when turnover exceeds the prescribed threshold or due to compulsory registration provisions, and
- The date on which GST registration is actually granted – after the person applies and the department processes it.
During this interim period, the person may have already issued invoices and made taxable outward supplies. Section 40 of the CGST Act, 2017 ensures that these initial supplies are not overlooked and must be disclosed in the first return filed after the registration is granted.
This is crucial because GST liability starts from the date of liability, not from the date of registration approval.
Legal Provision – Section 40 of the CGST Act
“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.”
| Element | Meaning / Explanation |
| “Registered person” | A person whose GST registration has been approved. |
| “Made outward supplies” | Includes all taxable supplies of goods, services, or both, whether inter-State or intra-State. |
| “Period between liability and grant of registration” | The interim period between the date you are legally required to register and the date your GSTIN is issued. |
| “Declare in first return” | Disclose these supplies in the first GST return (GSTR-3B and GSTR-1) filed after registration. |
Step-by-Step Compliance Process for First Return
Step 1: Identify Date of Liability
- Determine the exact date when your liability to register began:
- For threshold cases: the day turnover exceeded the prescribed limit.
- For compulsory registration: the date triggering the condition (e.g., inter-State supply, reverse charge liability, ECO operation).
Step 2: Apply for Registration Promptly
- Apply within 30 days from the date of liability (Section 25(1)).
- If delayed, registration will still be effective retrospectively from the liability date.
Step 3: Maintain Records for Interim Period
- Record all invoices issued, GST charged (if any), and receipts from customers.
- You are allowed to issue revised tax invoices within 1 month from the date of registration for supplies made during the interim period.
Step 4: Filing the First Return
- Your first return will be for the tax period in which registration is granted.
- Example:
- Date of liability: 10 May 2025
- Registration granted: 25 May 2025
- First return: For May 2025, covering 10 May – 31 May supplies in addition to post-registration supplies.
Forms to be filed:
- GSTR-3B – Summary return for tax payment.
- GSTR-1 – Detailed outward supplies report (invoice-wise for B2B, summary for B2C).
Example
Scenario:
- Threshold for goods exceeded: 10 April 2025.
- Registration applied: 20 April 2025.
- Registration approved: 5 May 2025.
- Sales during 10 April – 4 May: ₹4,00,000 taxable @18%.
- Sales from 5 May – 31 May: ₹6,00,000 taxable @18%.
GST Computation for First Return (May 2025):
| Period | Taxable Value | GST Rate | GST Amount |
| 10 Apr – 4 May | ₹4,00,000 | 18% | ₹72,000 |
| 5 May – 31 May | ₹6,00,000 | 18% | ₹1,08,000 |
| Total GST Payable | – | – | ₹1,80,000 |
Both pre- and post-registration period supplies are declared in May’s GSTR-3B and GSTR-1.
Penalties & Interest for Non-Compliance
| Provision | Description | Rate / Amount |
| Section 47(1) – Late fee | ₹50 per day (₹20 per day for nil return) | Subject to maximum of ₹5,000 per return |
| Section 50(1) – Interest | 18% per annum on unpaid tax | From due date till actual payment |
| Section 122 – General penalty | ₹10,000 or tax evaded (whichever is higher) | In cases of deliberate non-disclosure |