Section 31A of CGST explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 31A of the CGST Act 2017 empowers the Government to require prescribed registered persons to give their recipients the facility of prescribed electronic modes of payment. It ensures customers can pay through notified digital channels, at no extra charge, at the point of supply.
What Section 31A Says — In Plain English
Section 31A is a small but deliberate push towards a cashless, traceable economy. In simple terms, it gives the Government the power to say: "certain businesses must let their customers pay digitally." It does not itself list any business or any payment mode; it is an enabling provision. Once the Government issues a notification (on the GST Council's recommendation), the named class of registered persons must make prescribed electronic payment channels available to recipients — and cannot pass on any charge for using them. The burden sits on the supplier to offer the facility; the customer is never forced to use it.
The provision is a deliberate cousin of Section 269SU of the Income-tax Act, 1961, which already obliges businesses above a turnover threshold to provide prescribed electronic payment modes. Together they give a consistent digital-payment policy across the direct- and indirect-tax codes.
Clause / Sub-section Breakdown
- Enabling power: The Government may, on the GST Council's recommendation, by notification, specify a class of registered persons.
- Obligation: Such persons must provide the facility of prescribed electronic modes of payment to the recipient of a supply of goods or services or both.
- Prescribed by notification: Both the class of persons covered and the electronic modes to be offered are fixed by notification/rules, not by the section itself.
- No extra charge: Reading with the digital-payment framework, no fee (e.g. MDR) may be levied on the recipient for using a prescribed mode.
Applicability & Scope
Section 31A applies to a notified class of registered persons — in practice larger and B2C-facing suppliers where enabling acceptance improves transparency. It becomes operative when:
- A registered person falls within the notified class (for example, based on turnover or nature of business); and
- The person supplies goods or services to recipients who may wish to pay electronically.
Once notified, the supplier must ensure prescribed modes — such as UPI, BHIM-UPI QR codes or RuPay debit cards — are available at the point of supply, and cannot impose a surcharge for their use.
Worked Examples
Example 1 — Retail chain. Suppose the Government notifies that registered persons with aggregate turnover above ₹50 crore must offer prescribed electronic payment modes. DEF Retail Ltd, turnover ₹120 crore, falls within the class. It must enable, say, a BHIM-UPI QR code and RuPay debit-card acceptance at its billing counters so a customer buying goods worth ₹4,500 can choose to pay digitally. DEF cannot insist on cash, nor add a convenience fee for the digital mode.
Example 2 — Below threshold. A neighbourhood store, GHI Kirana, with turnover of ₹40 lakh, is not within the notified class. It may still accept UPI voluntarily, but Section 31A does not compel it to provide the facility, and no penalty attaches for offering only cash.
Step-by-Step in Practice
- Step 1: Check whether your aggregate turnover / business type falls within the notified class.
- Step 2: If covered, integrate the prescribed modes (e.g. UPI QR, RuPay) at every point of supply.
- Step 3: Ensure no convenience fee or surcharge is charged to the customer for the prescribed mode.
- Step 4: Keep the facility functional and displayed; align with Section 269SU compliance under income tax.
- Step 5: Retain evidence of the facility being offered to defend against non-compliance action.
Common Mistakes & Practical Notes
- Assuming Section 31A applies to everyone — it bites only on the notified class.
- Treating it as a duty on the recipient — the obligation is on the supplier to provide the facility.
- Levying a convenience fee / MDR on customers for the prescribed mode — not permitted.
- Ignoring the parallel Section 269SU income-tax obligation and its separate penalty.
- Offering a broken or non-functional QR/terminal and treating that as compliance.
Penalties, Timelines & Related Sections
Section 31A is enabling, so consequences flow once a class is notified. Non-compliance can attract penalty under Section 122 of the CGST Act. Under the parallel income-tax route, Section 271DB can impose a penalty of ₹5,000 per day for failure to provide the prescribed electronic modes under Section 269SU. Read Section 31A with:
- Section 31 — Tax invoice requirements.
- Section 269SU, Income-tax Act 1961 — Mandatory acceptance of prescribed electronic modes.
- Section 271DB, Income-tax Act 1961 — Penalty for failure under Section 269SU.
- Section 122, CGST Act — Penalty for certain offences.
- Payment and Settlement Systems Act 2007 — Governs the electronic payment modes themselves.
Recent Amendments & Context
Section 31A was inserted to keep GST law in step with India's Digital India push and the RBI's policy of promoting low-cost digital rails. Prescribed modes such as UPI, BHIM-UPI QR and RuPay debit cards already carry zero MDR under the income-tax framework, reinforcing the "no extra charge" principle. As UPI adoption deepens, the section stands ready to widen digital-payment acceptance whenever the Government notifies additional classes.