Section 31A of the Central Goods and Services Tax Act, 2017 deals with the facility of digital payment to the recipient of goods or services. The provision was introduced to support digital payments under the GST framework and gives the Government power to prescribe certain classes of registered persons who must provide specified electronic payment options to their customers.
Unlike provisions that directly impose a tax liability or prescribe a specific compliance deadline, Section 31A is primarily an enabling provision. It authorises the Government, on the recommendations of the GST Council, to prescribe the persons covered, the electronic payment modes, and the conditions and restrictions applicable to the facility.
What is Section 31A of the CGST Act?
Section 31A is titled “Facility of digital payment to recipient.”
The provision states that the Government may, on the recommendations of the GST Council, prescribe:
- a class of registered persons;
- the prescribed modes of electronic payment;
- the recipients to whom the facility is to be offered;
- the manner in which the facility must be provided; and
- the conditions and restrictions applicable to it.
The purpose is to give the recipient of a supply an option to make payment electronically to the registered supplier.
In simple terms, Section 31A creates a legal framework under which certain GST-registered businesses can be required to provide customers with specified digital payment facilities.
When Was Section 31A Introduced?
Section 31A was inserted into the CGST Act through the Finance (No. 2) Act, 2019. It came into force on 1 January 2020 through Notification No. 01/2020-Central Tax.
The provision was introduced following discussions in the GST Council concerning the promotion of digital payments under the GST regime. The GST Council’s records show that incentivising digital payments was considered as part of the policy discussion leading to the insertion of Section 31A.
Text of Section 31A
The statutory provision essentially provides that the Government may, on the recommendations of the GST Council, prescribe a class of registered persons who must provide prescribed modes of electronic payment to recipients of their supplies and give those recipients the option to make payment accordingly, subject to the prescribed manner, conditions and restrictions.
The wording is important because Section 31A itself does not identify every business that must provide a particular digital payment method.
Instead, it gives the Government the authority to prescribe those details through the GST framework.
Understanding Section 31A in Simple Language
Section 31A can be understood through four important components.
1. Government may prescribe the applicable class of registered persons
The provision does not automatically state that every GST-registered person must provide a particular electronic payment facility.
It allows the Government to prescribe a class of registered persons to whom the requirement will apply.
Therefore, a person should not interpret Section 31A as an unconditional requirement applicable to every registered taxpayer.
2. Prescribed electronic payment modes
Section 31A refers to prescribed modes of electronic payment.
This means that the specific payment mechanism or mechanisms applicable under the provision would depend upon the relevant rules, notifications or other prescribed requirements.
The section itself does not permanently specify one particular payment platform or technology.
3. The recipient must be given an option
Another important part of Section 31A is that the recipient is to be given an option to make payment accordingly.
Therefore, the underlying concept is not simply that the supplier must accept digital payments in some general sense. The provision is concerned with providing a prescribed electronic payment facility to the recipient where the relevant requirements have been prescribed.
4. Conditions and restrictions may apply
The Government may prescribe the manner, conditions and restrictions applicable to the facility.
Consequently, compliance cannot be determined merely by reading Section 31A in isolation. Where a particular requirement is being considered, the relevant notification, rules and other applicable GST provisions should also be examined.
Is Section 31A Applicable to Every GST Registered Person?
Section 31A does not itself make every registered person subject to a universal digital-payment requirement.
The wording specifically allows the Government to prescribe a class of registered persons. Therefore, the applicability of a particular requirement depends on the corresponding prescribed provisions.
This distinction is important for businesses because being registered under GST does not, by itself, mean that every digital-payment requirement contemplated by Section 31A automatically applies to that taxpayer.
Does Section 31A Make Digital Payment Compulsory for Customers?
The wording of Section 31A focuses on providing an option to the recipient to make payment through prescribed electronic modes.
Thus, the provision is structured around providing a digital payment option, rather than stating that every recipient must compulsorily pay digitally.
The recipient is given an option to use the prescribed electronic payment facility where the relevant requirement applies.
Relationship Between Section 31A and Section 31
Section 31 and Section 31A are located next to each other in Chapter VII of the CGST Act, which deals with tax invoices, credit notes and debit notes.
Section 31 primarily deals with the issuance of tax invoices and other prescribed documents, while Section 31A addresses the facility of digital payment to recipients.
This means that the two provisions deal with different aspects of a GST transaction:
| Provision | Main subject |
|---|---|
| Section 31 | Tax invoice and related documents |
| Section 31A | Facility of digital payment to recipient |
| Section 32 | Prohibition of unauthorised collection of tax |
| Section 33 | Amount of tax to be indicated in tax invoice and other documents |
Section 31A therefore complements the broader GST compliance framework surrounding invoices and transactions but does not replace the requirements of Section 31.
Section 31A and Digital Payment Facilities
Digital payment has become an important part of commercial transactions, particularly for B2C supplies.
Electronic payment can include technology-based payment mechanisms prescribed or recognised under the applicable framework. However, Section 31A itself deliberately uses the broader expression “prescribed modes of electronic payment” rather than permanently naming a particular payment method.
This gives the Government flexibility to prescribe suitable mechanisms as payment technology and GST compliance systems evolve.
👉 Read More → Section 32 – Prohibition of unauthorised collection of tax
Section 31A and Dynamic QR Code
Section 31A is also discussed in the context of GST provisions concerning digital payment and QR-based payment facilities.
The GST framework subsequently introduced requirements relating to Dynamic Quick Response (QR) codes for specified B2C invoices of certain registered persons. These requirements operate through the relevant GST rules and notifications and should not be treated as if the QR-code requirement is simply the text of Section 31A itself.
For example, Notification No. 14/2020-Central Tax introduced a requirement relating to Dynamic QR Code for specified B2C invoices issued by registered persons meeting the prescribed turnover condition, subject to the applicable exceptions and subsequent clarifications.
The distinction is important:
Section 31A provides the statutory enabling framework for digital payment facilities, whereas specific digital-payment or QR-code compliance requirements arise from the relevant rules and notifications.
Dynamic QR Code and B2C Transactions
A B2C transaction generally refers to a supply made by a registered supplier to an unregistered customer.
The GST framework introduced Dynamic QR Code requirements for specified B2C invoices, particularly for registered persons crossing the prescribed turnover threshold and subject to the applicable exclusions.
The QR code can facilitate electronic payment by allowing the customer to use a compatible payment application to make payment to the supplier.
These requirements have also been clarified through subsequent GST circulars and instructions. Therefore, businesses should verify the current applicability of Dynamic QR Code requirements rather than relying solely on the original notification.
Is Section 31A a Separate Tax or Levy?
No.
Section 31A does not impose a separate GST, cess or additional tax on the supplier or recipient.
Its purpose is related to the facility and mechanism of electronic payment.
The actual GST liability continues to be determined under the applicable provisions relating to supply, classification, rate, valuation, time of supply and payment of tax.
Is There a Separate GST Return for Section 31A?
Section 31A itself does not create a separate GST return.
GST returns and other compliance requirements continue to be governed by the relevant provisions of the CGST Act, CGST Rules and applicable forms.
A taxpayer should therefore not assume that a separate return or statement exists merely because Section 31A deals with digital payments.
Is There a Separate Form Under Section 31A?
Section 31A itself does not prescribe a separate statutory form for taxpayers.
The provision authorises the Government to prescribe the applicable classes, electronic payment modes, manner, conditions and restrictions.
Current GST reference material also identifies no separate rule or form specifically corresponding to Section 31A itself. The practical digital-payment requirements relevant to a taxpayer may instead arise through other GST rules, notifications and clarifications.
Why Was Section 31A Introduced?
The GST Council had considered the promotion of digital payments as part of the GST system. The proposal for Section 31A emerged from discussions on incentivising digital payments in the GST regime.
The provision creates a statutory mechanism through which digital-payment facilities can be prescribed for specified taxpayers.
From a compliance perspective, this can help connect invoicing and payment processes with electronic payment systems and make transaction-level digital records easier to maintain.
Example of Section 31A
Suppose a registered business supplies goods to customers and falls within a class of registered persons for whom the Government has prescribed a particular electronic payment facility.
The business may then be required to provide the prescribed payment facility to eligible recipients.
For example:
Supplier: Registered GST taxpayer
Recipient: Customer purchasing goods
Supply: Taxable supply of goods
Payment facility: Prescribed electronic payment mode
Recipient’s choice: Customer may choose the prescribed digital payment option
The important point is that the exact requirement would depend upon the applicable prescription issued under the GST framework.
Difference Between Section 31A and Normal Digital Payments
A business may voluntarily accept UPI, cards, internet banking or other digital payment methods even without relying specifically on Section 31A.
Section 31A is different because it creates a statutory enabling mechanism under which the Government can prescribe digital-payment facilities for specified classes of registered persons.
Therefore, the existence of Section 31A does not mean that every digital payment made by a GST taxpayer is being made under Section 31A.
Section 31A and GST Compliance
Businesses should understand that Section 31A should be read together with the other provisions of the GST law.
For example, a supplier may have to comply with:
- Registration requirements
- Tax invoice requirements
- Applicable GST rate
- Valuation provisions
- Return filing requirements
- Tax payment requirements
- E-invoicing requirements, where applicable
- QR-code requirements, where applicable
- Record-keeping requirements
- Digital-payment requirements, where specifically prescribed
The presence of a digital payment facility does not remove any of these other obligations.
Important Points to Remember About Section 31A
The following points summarise the key aspects of Section 31A:
- Section 31A deals with the facility of digital payment to the recipient.
- It was inserted into the CGST Act through the Finance (No. 2) Act, 2019.
- It came into force from 1 January 2020.
- The Government may prescribe a class of registered persons covered by the requirement.
- The prescribed electronic payment modes are determined through the applicable GST framework.
- The recipient is to be given an option to make payment through the prescribed electronic mode.
- The Government may prescribe conditions and restrictions.
- Section 31A itself does not impose an additional tax.
- Section 31A does not mean that every GST-registered person automatically has the same digital-payment obligation.
- Specific requirements concerning digital payment and Dynamic QR Code must be checked against the applicable rules, notifications and clarifications.
- The provision is connected with the broader GST objective of facilitating electronic transactions.
- Section 31A should not be confused with Section 31, which primarily deals with tax invoices and related documents.
Practical Importance for Businesses
For businesses, the most important practical lesson is to distinguish between voluntary digital payment acceptance and a specific statutory requirement under the GST framework.
Many businesses already accept payments through UPI, cards, payment gateways, bank transfers and other electronic methods. Such acceptance by itself does not mean that the business is complying with a particular requirement under Section 31A.
Where a taxpayer falls within a prescribed category, however, the taxpayer should examine the relevant notification, rule or clarification to determine the exact payment facility, customer category, turnover condition, exceptions and compliance requirements.
This is particularly important for businesses that issue B2C invoices and may also fall under the separate Dynamic QR Code requirements.
👉 Read More → Section 30 – Revocation of cancellation of registration
Section 31A vs Dynamic QR Code
These two concepts are closely related but should not be treated as identical.
| Basis | Section 31A | Dynamic QR Code |
|---|---|---|
| Nature | Enabling statutory provision | Specific GST compliance mechanism |
| Main purpose | Facility of electronic payment to recipient | Facilitate digital payment and prescribed invoice compliance |
| Coverage | Class of registered persons as prescribed | Specified taxpayers/transactions subject to applicable rules |
| Payment method | Prescribed electronic modes | Dynamic QR-based payment mechanism |
| Legal source | Section 31A | Relevant GST rules/notifications and clarifications |
| Universal requirement? | No | No; applicability depends on prescribed conditions |
The exact applicability of QR-code requirements should always be checked against the latest applicable GST notifications and clarifications.
Frequently Asked Questions About Section 31A of CGST Act
Conclusion
Section 31A of the CGST Act provides the legal framework for facilitating digital payments to recipients of goods or services. It empowers the Government, based on the recommendations of the GST Council, to prescribe the classes of registered persons, electronic payment modes, and applicable conditions and restrictions.
The section itself does not impose an additional tax and does not automatically make every GST-registered business subject to a particular digital-payment requirement. Its practical application depends on the relevant rules, notifications and other prescribed provisions.
For businesses, it is therefore important to distinguish Section 31A from separate GST requirements such as e-invoicing and Dynamic QR Code compliance. Where a particular digital-payment obligation applies, the taxpayer should follow the current prescribed requirements applicable to its class of registration and type of supply.
Based on Google's Helpful Content System, this article emphasizes user value, transparency, and accuracy. It incorporates principles of E-E-A-T (Experience, Expertise, Authoritativeness, Trustworthiness).
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