Allah The Almighty Says (what means): 

“Indeed, Allah confers blessing upon the Prophet, and His angels [ask Him to do so]. O you who have believed, ask [Allah to confer] blessing upon him and ask [Allah to grant him] peace.”

(Quran 33:56)

Ibn Katheer  commented that, in this verse, Allah The Almighty informs His servants of the elevated status of the Prophet  which is such that He praises him in the exalted assembly of the angels who are near Him, and they, in turn, ask Him to send His blessings on him . Then, Allah The Almighty orders the people of the earth to ask Him to confer blessings upon the Prophet  so that he would be praised by the dwellers of both worlds – heavenly and terrestrial.

In his book Jalaa’ Al-Afhaam, Ibn Ul-Qayyim  said that the implication here, is that if Allah The Almighty sends blessings on the Prophet  and His angels request the same from Him, then so should people. They are more duty-bound to do this, because they are the ones who have been blessed by the message of the Prophet  through which they shall receive honor in this worldly life and the Hereafter.

The meaning of “[conferring] blessings upon the Prophet ”, was expanded on, by a number of scholars; according to Abu Al-‘Aaaliyah  Allah The Almighty conferring blessings, refers to Him praising the Prophet  in the presence of angels, whereas angels conferring blessings means that they supplicate Allah The Almighty to do so.

Ibn Ul-Qayyim  said that the injunction to send blessings, which is cited in the verse above, signifies imploring Allah The Almighty to praise the Prophet  show him His grace and draw him closer to Him, which, in itself, indicates the honor he  has with Him.

As for the virtues of this act, ‘Abdul-Rahmaan ibn ‘Awf, may Allah be pleased with him, narrates: “Once, I came to the Prophet  while he was in prostration for a long time. [When he got up], he  said: ‘Jibreel (Gabriel), may Allah exalt his mention, came to me and said, ‘I will confer blessing upon the one who confers blessings upon you and I will ask Allah to grant peace to the one who asks Him to grant you peace’; so, I prostrated to thank Allah The Almighty.’” [Ahmad]

It was also reported by Abu Hurayrah, may Allah be pleased with him, that the Prophet  said: “If a person asks Allah to send blessings on me once, Allah will send blessings on him ten times over.” [Al-Haakim and Ahmad]

Likewise, Ya‘qoob ibn Zayd ibn Talhah At-Taymi, may Allah be pleased with him, narrates that the Prophet  said that “a messenger from Allah came to me and said [the same thing cited above].” So, a man came to the Prophet  and asked: “O Messenger of Allah, may I devote half of my supplications to you?” The Prophet  said: “As you like!” Then, the man asked: “Shall I devote two thirds of my supplications to you?” The Prophet  replied: “If you so desire.” The man then asked: “Shall I devote all of my supplications to you?” The Prophet  said: “Then Allah The Almighty will protect you against the distress of the worldly life and the Hereafter.”[Muslim]

‘Abdullaah ibn ‘Amr, may Allah be pleased with him, also narrates that the Prophet  gave good tidings, saying: “The one who invokes blessing on me or asks that I be given Al-Waseelah (a rank in Paradise which is fitting for only one of the Servants of Allah, and the Prophet  wishes to be this servant) will be assured of my intercession.” [Muslim]

On the other hand, he  said, as narrated by Abu Hurayrah, may Allah be pleased with him: “May he be a loser; he who does not ask Allah to confer blessings on me when I am mentioned in front of him! May he be disgraced, whose parents attain old age in his lifetime and they are not a cause for him to enter Paradise [because of his dutifulness to them]! May his nose be rubbed in dust [i.e., may he be humiliated]; he who witnesses Ramadan, but it ends before he is forgiven!”[At-Tirmithi]

Muhammad ibn ‘Ali  also reports that the Prophet once made a similar remark, when he said: “A person in whose presence my name is mentioned, but he [or she] does not ask for the blessings of Allah to be sent on me, loses the way to Paradise.” [Al-Jahdhami, Mursal – Albaani]

In fact, as Al-Hasan  relates, the Prophet  described a man as “miserly; in whose presence my name is mentioned while he does not pray for blessings to be sent on me!” [Al-Haakim and At-Tirmithi. At-Tirmithi: (Hasan Ghareeb Saheeh), Al-Albaani: (Mursal yet Saheeh)]

He  cautions, as Abu Hurayrah, may Allah be pleased with him, narrates: “If people sit in a gathering in which they do not remember Allah or ask for blessings to be conferred upon me, [that sitting of theirs] will be a cause of grief and regret for them o¬n the Day of Judgment. Allah may then forgive or punish them, as He sees fit.” [At-Tirmithi, Saheeh – Albaani]

Why not, when this act itself is so easy? ‘Ali ibn Al-Husayn  relates: “My father told me that my grandfather said, ‘The Prophet  said: ‘Do not [come to and] make my grave a place of festivity; but ask Allah to confer blessings and peace upon me, for your prayers and salutations reach me wherever you may be.’’” [Abu Daawood and Ahmad]

Similarly, ‘Abdullaah ibn Mas‘ood, may Allah be pleased with him, narrated that the Prophet  said: “Allah The Almighty has roaming angels who convey to me the blessings which my Ummah ask Allah The Almighty to confer upon me.” [An-Nasaa’i and Al-Haakim, Saheeh – Albaani]

The best supplication with which to ask Allah The Almighty to confer blessings upon the Prophet 

Abu Mas‘ood Al-Ansaari, may Allah be pleased with him, tells us: “We were sitting in the company of Sa‘d ibn ‘Ubaadah, may Allah be pleased with him, when the Messenger of Allah  came to us. Bishr ibn Sa’d asked: ‘Allah has commanded us to ask for blessings to be sent upon you, O Messenger of Allah. But, how exactly should we do that?’ The Prophet did not respond, and we became so perturbed over his silence that we wished we had not asked him. Then, he said: ‘Say: O Allah, confer Your blessings upon Muhammad and the members of his household as you have conferred blessings upon the members of Ibraaheem’s (Abraham) household. Grant favors to Muhammad and his family, as you have granted favors to the family of Ibraaheem, [wherever they are] in the worlds. Indeed, You are Praiseworthy and Glorious’. As for the invocation for the salutation of peace, it is as you know [from what I have previously told you].”[Muslim]

Benefits of invoking Allah The Almighty to send blessings on the Prophet 

1. It demonstrates obedience to the Command of Allah The Almighty and it is an angelic trait, as they, too, ask Him to confer blessings upon the Prophet .
2. A person gains blessings tenfold, for every time he or she invokes blessings upon the Prophet .
3. If a person does this, perhaps adding a prayer for the Prophet  to reach the station of Al-Waseelah, he or she gains his  intercession.
4. It removes the distress of a person in this life and the next, as the aforementioned Hadeeth narrated by Ya’qoob ibn Zayd ibn Talhah, may Allah be pleased with him, proves.
5. A person who observes the practice of sending peace and blessings on the Prophet  is guided by it to Paradise, and one who does not, is led away from it.
6. Allah The Almighty praises and mentions a person in good terms, if he or she asks Him to confer blessings upon the Prophet  which is tantamount to invoking Him to praise the Prophet  and honor and bless him and his household. Since such an invocation is certain to be answered by Allah The Almighty, the one who supplicated will be also rewarded in kind for his act, as the reward is of the same kind as the deed.
7. It encourages a person to love the Prophet  perpetually and increasingly; and, as it is a basic tenet of faith, there can be no faith without it. Furthermore, the Prophet  loves a person whose name is cited to him, as asking for blessings to be sent on him . Truly, what a great honor it is for a person’s name to be mentioned before the Prophet .

When to invoke blessings upon the Prophet 

1. It is vital that this be done after the Tashahhud (final sitting) in prayer. It is sanctioned, according to the consensus of Muslims, but there is a disagreement over its obligation.
2. It is to be uttered after the second Takbeer (utterance of Allahu Akbar, i.e., Allah is Great) of the funeral prayer. Az-Zuhari, relates that he heard Abu ‘Umaamah ibn Sahl ibn Haneef saying to Sa‘eed ibn Al-Musayyib : “The Sunnah in the funeral prayer is to recite the [first Quranic] chapter of Al-Faatihah (The Opening); then to confer blessings upon the Prophet  and then, to supplicate sincerely for the deceased until [the one offering prayer] concludes. He should recite this only once and then perform Tasleem (salutation) quietly.” [An-Nasaa’i and Al-Haakim, Saheeh – Albaani]
3. When the name of the Prophet  is mentioned, scholars differ on whether it is mandatory to invoke the peace and blessings of Allah The Almighty on him. At-Tahaawi and Al-Haleemi  concur on its obligation, while other scholars state that it is a favorable act, not a required one, in which case, not doing it, would not result in a sin.
4. It should be done upon entering and leaving the mosque. Faatimah, may Allah be pleased with her, narrated that the Prophet  told her: “When you enter the mosque, say: ‘Bismillaah, wassalaamu ‘ala Rasoolillaah. Allahumma salli ‘ala Muhammad wa ‘ala aali Muhammad, waghfir lana wassahhil lanaa abwaaba rahmatik (In the name of Allah; and may peace be upon His Messenger . O Allah, confer Your blessings upon Muhammad and his household; and, forgive us and facilitate for us the doors of Your Mercy)’. When you have finished [your prayers] and are exiting, repeat this again, and add: ‘Wa sahhil lanaa abwaaba fadhlik (and ease for us the doors of Your grace)’.’’ [Ibn Maajah and At-Tirmithi, Saheeh-Albaani]
5. It is also urged to be said after hearing the Athaan (call for prayer), as the Prophet  instructed: “When you hear the Athaan, say the same as the caller says, then invoke blessings upon me; the one who [does that] once will be rewarded by Allah blessing him ten times. Then, ask Allah to grant me Al-Waseelah, which is a rank in Paradise, designated for only one of the servants of Allah, and I hope to be him. So, who prays for Al-Waseelah for me will be assured of my intercession.”[Muslim]
6. One should utter it while supplicating to Allah The Almighty, as Fudhaalah ibn ‘Ubayd, may Allah be pleased with him, recounts “that the Prophet  heard a man supplicating to Allah in prayer without praising Him or invoking His blessings upon the Prophet . So, he said: ‘This man has hastened.’ Then, the Prophet  called the man and, addressing all the attendants, said: “When any one of you prays, he should start by glorifying Allah The Almighty and praising Him; he should then invoke blessings upon the Prophet ; after that, he may supplicate for whatever he wants.” [At-Tirmithi and Ahmad]
7. Friday is also a special day for it, as Aws ibn Aws, may Allah be pleased with him, narrates that the Prophet said: “The best of your days is Friday. On that day, Aadam (Adam), may Allah exalt his mention, was created and his life was taken away; on that day, the trumpet will be blown and on it, all of the creation will lose consciousness [as signs of the Hour]. So, ask Allah The Almighty, frequently, to confer a great deal of blessings upon me, for [your invocations] will be shown to me.” The Companions, may Allah be pleased with them, asked: “O Messenger of Allah, how will our prayers be presented to you when you will have turned to dust?” He replied: “Allah has forbidden the earth to consume the bodies of the Prophets.” 

8. It should also be said during all sermons, including the one with the Friday prayer, on the days of Eid and when offering the prayer for rain.
9. It is recommended to be uttered when getting up after gathering.
10. It is also Sunnah to ask Allah to confer blessings on the Prophet  when concluding a marriage contract. 

Source:  Al-Bahr Ar-Raa’iq, by Shaykh Ahmad Fareed