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Section 81 of the CGST Act, 2017

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GST›CGST Act, 2017›Chapter XV, Demands and Recovery

At a glance

Entitlement and conditions

81 provisoThe protection requires adequate consideration, good faith and absence of notice of pending proceedings or of the tax or other sum, or the proper officer’s previous permission.

Bars, duties and time limits

81A charge or transfer intended to defraud revenue, made after an amount becomes due, is void against tax or other payment claims; the property may belong to the person or be in their possession.

Procedure, powers and definitions

81The law does not settle how or when adequacy of consideration is tested, or when an amount becomes due for this purpose.

A person must not use a charge or transfer of property to defraud Government revenue after an amount has become due. Such dealings are void against claims for tax or other sums. The proviso protects qualifying dealings for adequate consideration, in good faith and without the specified notice, or dealings made with the proper officer’s previous permission.^[1]

Quick facts

Section 81, CGST Act, 2017

Transfer of property to be void in certain cases

Provision
Act	Central Goods and Services Tax Act, 2017
Chapter	XV, Demands and Recovery
Section title	Transfer of property to be void in certain cases
In force from	1 July 2017^[1]
Amendments
Last amendment	1 July 2017: Enforced the section. There is no later amendment footnote on this section. (—)
Amendments	1 footnote in the CBIC text (table)
Related provisions
Sections	2, 78, 79, 82, 83
Structure 81 opening wordsThe amount that had become due 81, the actThe charge or the transfer 81, the intention limbThe intention of defrauding the Government revenue 81, the effectThe claim against which it is void 81 provisoThe proviso
Source
Law text	CBIC tax information portal, served on 17 September 2026^[1]
Questions reviewed	Prashant Prakash, 22 September 2026

Text

The text below is the section as served by the CBIC tax information portal on 17 September 2026, with the portal's own amendment footnote markers (shown as small numerals before a bracket) and its footnotes.^[1] The Act as published in the Gazette of India is the legal source.

Section 81, verbatim (show)

* Section 81. Transfer of property to be void in certain cases.-

Where a person, after any amount has become due from him, creates a charge on or parts with the property belonging to him or in his possession by way of sale, mortgage, exchange, or any other mode of transfer whatsoever of any of his properties in favour of any other person with the intention of defrauding the Government revenue, such charge or transfer shall be void as against any claim in respect of any tax or any other sum payable by the said person:

Provided that, such charge or transfer shall not be void if it is made for adequate consideration, in good faith and without notice of the pendency of such proceedings under this Act or without notice of such tax or other sum payable by the said person, or with the previous permission of the proper officer.

*Enforced w.e.f. 1st July, 2017.

Questions to answer on the file

Questions a reviewer answers from the engagement file, grouped by the part of the section they come from. They describe what the section asks; they do not decide it.

Scope the section as a whole

Questions to answer on the file1 question

What is the matter about?

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The amount that had become due 81 opening words

Questions to answer on the file3 questions

Had an amount become due from the person?
On what date did that amount become due from the person?
On what date was the charge created or the property parted with?

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The charge or the transfer 81, the act

Questions to answer on the file4 questions

What did the person do with the property: created a charge on it or parted with it?
By which mode was the property dealt with: sale, mortgage, exchange or any other mode of transfer whatsoever?
Did the property belong to the person, or was it in his possession: it belonged to him, it was in his possession or neither?
Was the charge or transfer made in favour of another person?

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The intention of defrauding the Government revenue 81, the intention limb

Questions to answer on the file2 questions

Has the intention of defrauding the Government revenue been alleged against the person?
Was the charge or transfer made with the intention of defrauding the Government revenue?

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The claim against which it is void 81, the effect

Questions to answer on the file3 questions

Is a claim being made in respect of tax or of any other sum payable by the person?
What is the claim in respect of: any tax or any other sum payable by the said person?
Is the sum claimed payable by the person who created the charge or parted with the property?

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The proviso 81 proviso

Questions to answer on the file5 questions

Was the charge or transfer made for adequate consideration?
Was the charge or transfer made in good faith?
Did the person in whose favour it was made have notice of the pendency of proceedings under this Act?
Did that person have notice of the tax or other sum payable by the said person?
Was the previous permission of the proper officer obtained for the charge or transfer?

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Amendment history

The CBIC text carries 1 footnote. The table gives each in the source's own terms. Effective dates are as the footnotes state them.^[1]

Amendments to section 81 as footnoted in the CBIC text
Note	Change	Instrument	Effective from
	Enforced the section. There is no later amendment footnote on this section.	—	1st July, 2017

Provisions connected to Section 81
Provision	Connection	Words that tie them
Section 2	this provision defined by Section 2 at 2(91)	proviso "or with the previous permission of the proper officer"
Section 79	this provision requires Section 79	81 "as against any claim in respect of any tax or any other sum payable by the said person", the claim being pressed through the recovery provisions
Section 78	Section 78 requires this provision	78 "shall be paid by such person within a period of three months", the period during which a person may deal with his property while an amount stands due

Circulars and notifications

Circulars and notifications in the CBIC repository that cite this section, newest first, by number, date and subject. A listing here does not say what an instrument decides; read the instrument.

Circulars (1)

Number	Date	Subject
Circular No. 3/03/2017-GST	5 July 2017	Proper officer relating to provisions other than Registration and Composition under the Central Goods and Services Tax Act, 2017-Reg.

Unsettled questions

The words of section 81 do not answer these questions. Where one decides a matter on the file, the answer depends on the position taken on it.

What makes consideration "adequate" for the proviso, and at what date is adequacy tested — the date of the agreement, the date of the instrument, or the date the claim is pressed? The proviso requires adequate consideration and gives no measure of adequacy and no date.
At what moment does an amount "become due" from a person for the purposes of this section: when the liability arises, when it is determined by an order, when that order is served, or when the period allowed for payment expires? The section fixes the reach of the whole provision by that moment and nowhere says what it is.

See also

Section 79 of the CGST Act, 2017: recovery of tax
Section 83 of the CGST Act, 2017: provisional attachment to protect revenue in certain cases

References

Central Board of Indirect Taxes and Customs. "Section 81. Transfer of property to be void in certain cases". Central Goods and Services Tax Act, 2017, CBIC tax information portal, with amendment footnotes 1 to 1. Retrieved 17 September 2026.

External links

CGST Act, 2017, Section 81 on the CBIC tax information portal