Notification No. 40/2017 – Central Tax Explained

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Notification No. 40/2017 – Central Tax: Seeks to make payment of tax on issuance of invoice by registered persons having aggregate turnover less than Rs 1.5 crores

GST: [To be published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i)]

G.S.R….(E).- In exercise of the powers conferred by section 148 of the Central Goods and Services Tax Act, 2017 (12 of 2017) (hereafter in this notification referred to as the ‘said Act’), the Central Government, on the recommendations of the Council,

hereby notifies the registered person whose aggregate turnover in the preceding financial year did not exceed one crore and fifty lakh rupees or the registered person whose aggregate turnover in the year in which such person has obtained registration is likely to be less than one crore and fifty lakh rupees and who did not opt for the composition levy under section 10 of the said Act as the class of persons who shall pay the central tax on the outward supply of goods at the time of supply as specified in clause (a) of sub-section (2) of section 12 of the said Act including in the situations attracting the provisions of section 14 of the said Act,

and shall accordingly furnish the details and returns as mentioned in Chapter IX of the said Act and the rules made thereunder and the period prescribed for the payment of tax by such class of registered persons shall be such as specified in the said Act.

(Dr. Sree Parvathy S.L.)
Under Secretary to the
Government of India

📚 Frequently Asked Questions (FAQs): Notification No. 40/2017 – Central Tax

Q1: What is Notification No. 40/2017 – Central Tax?

Answer:
Notification No. 40/2017 – Central Tax was issued on 13 October 2017 under Section 148 of the CGST Act.
It identifies taxpayers with turnover up to ₹1.5 crore (not under the composition scheme) and requires them to pay GST at the time of supply of goods.

Q2: Who is eligible under Notification No. 40/2017?

Answer:
The notification applies to:
Registered taxpayers
Turnover below ₹1.5 crore
Not opting for composition levy under Section 10
These taxpayers must follow normal GST tax payment rules.

Q3: What is the turnover limit mentioned in the notification?

Answer:
The turnover limit specified in Notification No. 40/2017 – Central Tax is:
₹1.5 crore aggregate turnover in the previous financial year.

Q4: What does “time of supply” mean in GST?

Answer:
Time of supply refers to the point when GST liability arises.
Under Section 12(2), it is the earlier of:
Invoice date
Payment date
This rule determines when GST must be paid to the government.

Q5: Does this notification apply to composition dealers?

Answer:
No.
Businesses opting for composition levy under Section 10 of CGST Act are not covered under Notification No. 40/2017 – Central Tax.

Q6: What happens if turnover exceeds ₹1.5 crore?

Answer:
If turnover exceeds ₹1.5 crore:
The taxpayer must follow regular GST procedures
The benefit under this notification may no longer apply
Businesses should regularly monitor turnover limits.

Q7: Is GST registration mandatory for small businesses?

Answer:
GST registration becomes mandatory if turnover exceeds:
₹40 lakh (goods)
₹20 lakh (services)
You can easily register with Finodha GST Registration services:
https://finodha.in/online-gst-registration/

Q8: What GST returns must be filed under this notification?

Answer:
Businesses must file normal GST returns such as:
GSTR-1 (Outward supplies)
GSTR-3B (Monthly tax payment)
To avoid penalties, ensure timely filing using Finodha GST Return Filing services.

Q9: What is aggregate turnover in GST?

Answer:
Aggregate turnover includes:
Taxable supplies
Exempt supplies
Export supplies
Inter-state supplies
It excludes GST taxes themselves.

Q10: Can startups benefit from this notification?

Answer:
Yes.
Startups with turnover below ₹1.5 crore and registered under GST may fall under this category.
If you are planning a startup, explore Finodha Business Setup services:
https://finodha.in/setup-business/

Q11: How does Section 148 relate to this notification?

Answer:
Section 148 allows the government to define special compliance procedures for certain taxpayers.
Notification No. 40/2017 was issued using this section.

Q12: What documents are required for GST compliance?

Answer:
Important documents include:
GST invoices
Purchase records
Sales records
GST returns
Tax payment challans
Maintaining proper records avoids compliance issues.

Q13: What penalties apply for GST non-compliance?

Answer:
Failure to comply may lead to:
Late filing fees
Interest on tax
GST notices
Registration suspension
Professional assistance can help avoid penalties.

Q14: Where can businesses get professional GST help?

Answer:
GST compliance can be complex for small businesses.
You can get professional help through Finodha GST Compliance services:
https://finodha.in/gst-compliance/
Experts can assist with:
GST registration
Return filing
Compliance management

Conclusion

Notification No. 40/2017 – Central Tax plays an important role in clarifying GST tax payment rules for small businesses with turnover up to ₹1.5 crore. Issued under Section 148 of the CGST Act, it identifies a class of taxpayers who must pay GST at the time of supply of goods while following normal GST return procedures.

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