GST Section 31A Explained: Mandate for Digital Payments by Registered Suppliers

Section 31A of the CGST Act, 2017, introduced by the Finance (No. 2) Act, 2019 and effective from January 1, 2020, empowers the government to mandate specified classes of GST-registered persons to provide prescribed digital payment options to recipients of goods or services. This provision aims to promote transparency, enhance convenience, and support the government’s broader agenda of a digitized economy.

While suppliers must offer electronic payment modes like UPI, credit/debit cards, and net banking, recipients retain the freedom to choose their preferred payment method. Section 31A thus balances digital empowerment with user choice, driving India’s shift toward a less-cash economy.

Empowering Recipients: Understanding GST Section 31A and the Mandate for Digital Payments

The Goods and Services Tax (GST) framework in India continues to evolve in response to the growing needs of a digitized economy. One such crucial step toward modernization is Section 31A of the Central Goods and Services Tax (CGST) Act, 2017, which deals with the requirement to provide digital payment options to recipients of goods or services.

AUBSP explains this significant legal provision in simple terms so that businesses and recipients alike can navigate the implications with confidence and clarity.

Background: The Push Toward a Digital Economy

The Indian government has made consistent efforts to promote digital transactions. Section 31A is a legislative embodiment of this goal under GST. AUBSP understands that for any law to be effective, it must benefit both the business community and the public, and Section 31A achieves just that.

Key Provisions of GST Section 31A

1. Empowerment of the Government

Section 31A authorizes the Central Government, on the advice of the GST Council, to notify certain classes of registered persons who are required to provide digital payment options. This means the law is not universal—it only applies to notified businesses.

2. Mandate to Provide Prescribed Modes of Electronic Payment

The identified businesses must offer specified digital payment options to customers. Although the section itself does not specify these modes, notifications may include:

• UPI (Unified Payments Interface)
• Debit/Credit Cards
• Net Banking
• Bharat QR Code
• Mobile Wallets
• POS (Point of Sale) Systems

These prescribed modes are determined based on feasibility, accessibility, and prevalence.

3. Freedom of Choice for Recipients

The section ensures customer empowerment. While suppliers must offer electronic payment options, customers are free to choose whether to pay digitally or through other accepted methods (like cash). This provision promotes inclusion while nudging users toward digitization.

4. Manner, Conditions, and Restrictions

Section 31A is to be implemented subject to rules that may outline:

• The threshold turnover of suppliers who must comply.
• The specific payment modes to be offered.
• The types of transactions for which the rule applies.
• Any technological or infrastructure requirements.

This flexibility allows the government to tailor obligations based on sector readiness and risk assessments.

Benefits and Implications

✦ For Recipients (Customers)

✦ For Suppliers (Registered Persons)

✦ For the Government

Timeline of Key Developments

Current Status (as of June 2, 2025)

The government has begun notifying the specific classes of businesses that must comply with Section 31A, especially those with high turnover or operating in consumer-centric sectors like:

• Retail trade
• Restaurants and food delivery services
• E-commerce operators
• Healthcare service providers
• Educational institutions receiving tuition digitally

AUBSP advises businesses to regularly monitor GSTN updates and ensure that their billing and payment systems comply with the latest mandates. Non-compliance could lead to penalties or audit scrutiny.

Compliance Tips for Businesses

Here are a few practical tips from AUBSP to help you stay compliant:

1. Check whether your business falls under the notified class.
2. If yes, integrate at least one or more prescribed digital modes of payment into your billing system.
3. Update invoice formats, website payment options, and customer-facing displays.
4. Train staff to encourage digital payment acceptance and resolve customer queries.
5. Maintain digital transaction records for GST audits and reconciliations.

Section 31A is more than a regulatory provision—it’s a catalyst for India’s digital transformation. It empowers customers, reduces administrative burdens for suppliers, and strengthens the nation’s economic integrity.

We believe that laws like Section 31A play a vital role in bridging the gap between convenience and compliance. As India moves toward becoming a truly digital economy, embracing such changes is not just beneficial—it’s essential.

Stay tuned with AUBSP.com for regular updates, compliance insights, and expert commentary on all things GST. Let’s walk this journey of digital empowerment together.

FAQs on Mandate for Digital Payments

What is Section 31A of the CGST Act, 2017?
Section 31A empowers the government to require certain GST-registered persons to provide specified electronic payment modes to recipients of goods or services.

When was Section 31A introduced and made effective?
It was introduced by the Finance (No. 2) Act, 2019 and came into effect on January 1, 2020.

What is the main objective of Section 31A?
The primary aim is to promote digital payments and ensure recipients have access to convenient, electronic modes of payment.

Does Section 31A apply to all GST-registered businesses?
No, it applies only to specific classes of registered persons as notified by the government based on GST Council recommendations.

What kinds of digital payment modes are included under Section 31A?
Though not explicitly listed in the Act, common modes may include UPI, debit/credit cards, net banking, mobile wallets, and Bharat QR.

Is it mandatory for a customer to pay only via digital modes?
No, customers have the option to choose how they wish to pay. The supplier must offer digital modes, but the customer is not bound to use them.

How does Section 31A benefit recipients of goods and services?
It enhances convenience, enables faster payments, and helps in better tracking and record-keeping of transactions.

What are the benefits of Section 31A for suppliers?
Suppliers benefit from reduced cash handling, faster reconciliation of payments, and increased operational efficiency.

What is the role of the GST Council under Section 31A?
The GST Council recommends which classes of registered persons should be covered and advises on the prescribed modes of payment.

Are there any penalties for non-compliance with Section 31A?
Yes, failure to comply with the notification requirements can result in penalties under relevant provisions of the CGST Act.

Can small businesses be exempted from Section 31A?
Yes, exemptions may be granted depending on turnover or other criteria, as notified by the government.

Does Section 31A apply to e-commerce operators?
Yes, in many cases, e-commerce operators fall under the notified classes that must offer digital payment facilities.

Are there any specific turnover limits for applicability of Section 31A?
The turnover limits, if any, are prescribed through rules and notifications issued by the government from time to time.

How can a business know if it falls under the notified class for Section 31A?
Businesses must refer to the latest government notifications or consult with tax professionals for applicability status.

Is there a list of prescribed electronic payment methods under GST rules?
Yes, the prescribed modes are detailed in relevant notifications or rules issued under the CGST framework.

What kind of infrastructure is required for compliance with Section 31A?
Businesses may need POS machines, UPI QR codes, payment gateways, or mobile apps to enable electronic payments.

How does Section 31A support the Digital India initiative?
It aligns with the government’s vision of a less-cash economy by encouraging wider adoption of digital payment systems.

Does this section override the freedom of recipients to pay in cash?
No, recipients still retain the right to pay in cash or any other accepted mode; the supplier is only required to offer digital options.

How does Section 31A contribute to tax compliance?
Digital payments create transparent records that help reduce tax evasion and improve GST audit processes.

Can a recipient file a complaint if a supplier doesn’t provide digital payment options?
Yes, complaints can be filed with the GST authorities or consumer forums if a notified supplier fails to comply.

Is there any format for displaying digital payment options?
While no fixed format is prescribed, businesses are expected to clearly display all available digital payment modes to customers.

Are State Governments also empowered to implement Section 31A?
Yes, under respective SGST Acts, state governments may issue similar notifications based on the GST Council’s recommendations.

How often are updates made to the notified classes under Section 31A?
Updates may be issued periodically through official notifications by the central or state governments.

Is GST registration mandatory for businesses covered under Section 31A?
Yes, only GST-registered persons can be covered under this section.

Where can I find the latest notification related to Section 31A?
You can check the official GST portal (www.gst.gov.in) or Central Board of Indirect Taxes and Customs (CBIC) website.

How can AUBSP help businesses comply with Section 31A?
AUBSP provides regular updates, practical guides, and expert insights to help businesses understand and implement GST rules like Section 31A effectively.