Effective date On issue of the law amendment, rule, notification or circular, unless a specific date is shown on the card.
The release (paras 8.2 and 8.3) ties both reliefs to credit availed on or after the stated date, not to the date the refund application is filed. Credit already in the ledger before those dates stays outside the formula.
Inverted duty structure
ReliefAct amendment
Inverted duty structure: credit on input services and capital goods becomes refundable.
Clause (ii) of the proviso to section 54(3) to be amended to allow refund of accumulated credit on input services and on capital goods in inverted duty structure cases.
Capital goods credit is refunded over 60 months.
EffectiveInput services
ITC availed before 1 Nov 2026Outside refund
1 Nov 2026
ITC availed on or after 1 Nov 2026Refundable
EffectiveCapital goods
ITC availed before 1 Apr 2027Outside refund
1 Apr 2027
ITC availed on or after 1 Apr 2027Refundable, 1/60 a month
Background: the journey of the issue
2017GST launched
The refund formula counts only credit on inputs. Input services and capital goods are left out.
2020High Courts split
Gujarat High Court reads input services into the formula. Madras High Court upholds the restriction.
Sep 2021Supreme Court rules
The restriction is upheld in VKC Footsteps. The Court urges the Council to reconsider the formula.
Sep 2025GST 2.0 widens the gap
Many goods move to 5% while services stay at 18%.
Oct 202657th Council opens refund
Refund of ITC availed on input services from 1 November 2026, and on capital goods from 1 April 2027.
Bottom lineInput-service credit stops piling up from 1 November 2026. Credit already accumulated stays under the existing formula. The gain is largest where services, not raw material, make up most of the cost:
Mining of minor minerals and quarrying. Sand, stone chips, limestone, and marble and granite blocks sell at 5%, against mining contracts, royalty under reverse charge, equipment hire and transport at 18%. Earthmovers and crushers add a capital goods refund on ITC availed on or after 1 April 2027. Metal ores and coal already moved to 18%, so the relief is mainly for quarry and minor mineral operators.
FMCG, packaged food and pharmaceuticals. Many products and most medicines are at 5%, while packaging, advertising, cold storage, logistics, testing, clinical research and IT services carry 18%.
Textiles, garments and footwear. The product goes out at 5%, while design, rent, logistics and marketing come in at 18%.
Renewable energy, fertilisers and farm machinery. Solar modules, wind turbines, fertilisers, tractors and farm machinery sell at 5%, against engineering, erection, EPC, handling, transport and plant maintenance services at 18%.
Track input-service credit separately from 1 November 2026, and plan major equipment purchases around 1 April 2027.
Section 54(3)ITC availed from 1 Nov 2026 and 1 Apr 2027
Capital goods ITC becomes refundable on exports, and the 1.5 times cap on export value is removed.
Refund of accumulated credit on capital goods allowed for zero-rated supplies, spread over 60 months.
Rule 89(4)(C) amended to remove the restriction of zero-rated turnover of goods to 1.5 times the value of like goods supplied domestically.
FORM RFD-01 to capture details in system-readable form, dispensing with scanned uploads for zero-rated and inverted duty claims.
EffectiveCapital goods
ITC availed before 1 Apr 2027Outside refund
1 Apr 2027
ITC availed on or after 1 Apr 2027Refundable, 1/60 a month
Background
For exports under a letter of undertaking, the refund formula in rule 89(4) counts "net ITC" as credit on inputs and input services only. Credit on capital goods has never been refundable on this route, so export units with heavy machinery have often absorbed that tax as cost, unless they had domestic tax to set it off against.
Rule 89(4)(C) capped export value at 1.5 times the domestic price of like goods. Meant to stop over-invoicing, it cut refunds of genuine exporters with higher export prices or no domestic sales.
Bottom lineFor exporters working under a letter of undertaking, GST paid on machinery and equipment has so far not been refundable. Capital goods ITC availed on or after 1 April 2027 becomes refundable, at 1/60 a month over 60 months. The businesses that gain most:
IT and software companies delivering offshore. Servers, network equipment, laptops and power backup for development and support centres serving foreign clients carry 18%. Nearly all service exporters work under LUT, so this credit tends to accumulate.
Global capability centres, BPO and KPO units, and data centres serving overseas customers. Servers, cooling and power systems make up most of the cost, and hardware is refreshed every three to four years, so the refund becomes a large and recurring cash flow rather than a one-time gain.
Export manufacturers. Pharma and API plants, engineering and auto component makers running CNC machines, and textile and garment units with looms and stitching lines.
Two limits
Only ITC availed on or after 1 April 2027Time large equipment purchases planned for early 2027.
Buildings and civil works stay blockedSection 17(5) continues. Track plant and machinery ITC asset by asset.
Acknowledgement in 10 days, and 90% of the refund sanctioned by the system, without an officer.
Phase 190%
Acknowledgement15 10 days
Day 10
No action by day 10? The system treats the application as acknowledged.
Provisional sanction by the system
Zero-rated and inverted duty claims
On risk evaluation
No officer intervention
Phase 2Full
Automated sanction of the full claimZero-rated claims
System acknowledgement on verification
After adjusting pending dues, on risk evaluation
No officer intervention
Explanation in section 54(14) that the ₹1,000 threshold applies to the total refund amount, CGST, SGST and IGST taken together.
Bottom lineClean records mean faster refunds. Keep GSTR-1 matched with the shipping bills, export proceeds matched with the export invoices, and the letter of undertaking up to date, and your claims stay in the automatic lane.
Pre-deposit refund: one clear rate of interest when you win your appeal.
Section 115 to be amended to become a standalone provision on the rate of interest payable on refund of the pre-deposit made for filing an appeal.
A circular to clarify the issues on the rate of interest on refund of pre-deposit.
A separate circular on various issues relating to payment of pre-deposits.
NowSection 115Rate borrowed from section 56
6%Refund not paid within 60 days of the application9%Refund from an appellate, Tribunal or court order, not paid within 60 days of the application
Different interest in different places
After the changeSection 115Standalone provision on the rate
One rate
Circulars on the rate and on payment of pre‑deposits
Background
Section 115 allows interest on refund of pre-deposit from the date of payment, but borrows the rate from section 56, which carries two rates: 6% where a refund is not paid within 60 days of the application, and 9% where a refund arising from an order of an appellate authority, the Tribunal or a court is not paid within 60 days of the application filed after that order.
Field formations have applied either rate, and some have insisted on a fresh refund application before paying, so the same successful appeal earned different interest in different places.
Bottom lineA won appeal should come back with the right interest, without argument. Keep a record of every pre-deposit with its date of payment, because interest runs from that day.
Section 115Interest from date of payment
IGST refund on exports, rule 96(10)
ReliefRules, retrospective
Exporters who imported under advance authorisation keep their IGST refunds, back to 2017.
Omission of rule 96(10) to be made retrospective, in line with the Supreme Court's decision.
EffectiveRetrospectively from 23 October 2017
Background
Rule 96(10) denied refund of IGST paid on exports where the exporter had imported inputs under concessional schemes such as advance authorisation or EOU.
It was omitted by Notification 20/2024-Central Tax from 8 October 2024, without a saving clause. The department continued to pursue recovery for earlier periods.
In Goodluck India Ltd v. Union of India (SLP (C) 24550 of 2025, decided 6 August 2026), the Supreme Court held that the omission applies to all proceedings pending on that date, and dismissed the Revenue's appeals. It relied on the Constitution Bench in Kolhapur Canesugar Works Ltd v. Union of India (2000) 2 SCC 536, which holds that a rule omitted without a saving clause cannot sustain pending proceedings. CBIC accepted the ruling by Office Memorandum dated 24 August 2026.
The Council's recommendation goes a step further: by making the omission effective from 23 October 2017, the rule falls away for the whole period, not only for matters pending on 8 October 2024.
Bottom lineDemands to recover IGST refunds under rule 96(10) lose their basis for the entire period. In pending matters, seek closure now on the strength of Goodluck India. Where recovery was completed before 8 October 2024, examine a refund claim once the retrospective notification issues.
Effective date On issue of the law amendment, rule, notification or circular, unless a specific date is shown on the card.
Blocked credits, section 17(5)
ReliefAct amendment
Six heads of blocked credit are opened.
Outdoor catering.
Health and life insurance.
Telecommunication towers.
Pipelines laid outside factory premises.
Free samples.
Goods destroyed or written off on expiry of shelf life as required by law.
Background
Outdoor catering. Section 17(5)(b) allowed credit only where the employer was legally obliged to provide it, or where it was used for supplying catering.
Health and life insurance. Section 17(5)(b) allowed credit only where the employer was legally obliged to provide such cover to employees.
Towers and pipelines. The explanation to section 17 kept both out of "plant and machinery", so they were blocked as immovable property. Under the earlier CENVAT regime, the Supreme Court in Bharti Airtel Ltd v. Commissioner of Central Excise, Pune (20 November 2024) held mobile towers and prefabricated shelters to be movable and allowed credit, but the express exclusion under GST kept towers blocked. The Supreme Court's functionality test in Chief Commissioner of CGST v. Safari Retreats Pvt Ltd (2024) raised hopes, but the Finance Act, 2025 amended section 17(5)(d) retrospectively from 1 July 2017 and closed that route.
Free samples and expired stock. Section 17(5)(h) required reversal of credit on samples and on goods destroyed or written off. Pharma and FMCG companies paid twice: they lost the stock and also had to reverse the credit, even where food and drug laws required the destruction.
Bottom lineEveryday business costs now earn credit, which lowers the cost of running the business.
HeadWho gainsKeep on record
Outdoor cateringEmployers providing meals to staffInvoices and the staff meal policy
Health and life insuranceEmployers covering staff as company policyInsurance policies and the staff benefit policy
Telecom towersTower companies and telecom operatorsInvoices and the fixed asset register
Pipelines outside the factoryOil and gas, city gas distribution and process industriesInvoices and the fixed asset register
Free samplesPharma, FMCG and food businessesSample issue register
Goods destroyed on expiryPharma, FMCG and food businessesDestruction records in the form the regulator requires
A genuine buyer's input tax credit should not be denied because of a supplier's default — referred to a committee of officers, to take effect from 1 April 2027.
The agenda was to amend section 16(2)(c), under which a genuine buyer's ITC was blocked or reversed whenever any supplier in the value chain failed to deposit the tax or passed on fake credit.
Credit is denied even where the buyer holds the invoice, has received the goods or services and has paid the supplier — only because someone further down the chain is non-compliant.
The Council agreed the position needs to be rationalised, balancing relief for honest buyers with curbing misuse of ITC.
On the request of several states and in the spirit of cooperative federalism, the matter was referred to a standing committee of officers for examination.
The committee is to report within three months; the Council will then take a final decision, for implementation from 1 April 2027.
Background — recent case law
Supreme Court — Suncraft Energy Pvt. Ltd. (SLP dismissed, 14 December 2023). By dismissing the department's appeal against the Calcutta High Court order, the Court let stand the view that a genuine buyer's ITC cannot be denied merely because the supplier did not deposit the tax — except in exceptional cases such as a missing supplier or collusion, where the department must first proceed against the defaulting supplier.
Punjab & Haryana High Court — Shaurya Alloys (1 October 2026). Deciding a batch of writ petitions, the Court upheld the validity of section 16(2)(c) read with section 155 but held it cannot be applied mechanically against a bona fide purchasing dealer for the supplier's default; a supplier's default can trigger an inquiry but cannot, by itself, fix the buyer's liability.
Reported developments only. Dismissal of a special leave petition does not by itself settle the law, and the liability for an upstream default remains open — verify the full orders before relying on them.
Bottom lineAn honest buyer who holds valid documents and has paid the supplier should not lose credit for someone else's default. The exact shape is to be settled by the committee.
Limited credit for restaurants, hotels and gyms buying the same service.
Limited input tax credit in the same line of business for restaurant and outdoor catering, hotel accommodation up to ₹7,500 per unit per day, and gym and fitness services, in the same way as is already available for passenger transport, tour operators and renting of motor vehicles.
Now covered
Restaurant and outdoor catering
Hotel accommodationup to ₹7,500 per unit per day
Gym and fitness
Already covered:Passenger transportTour operatorsRenting of motor vehicles
How the credit works
You buyThe same service5%
Credit
You sellThe same service5%
✕ Credit on other inputs and input services stays blocked
Bottom lineTax paid on a service bought from another business in the same line can now be set off against the tax charged to the customer. Typical cases:
A caterer subcontracting part of an order to another caterer.
A hotel chain or travel aggregator booking rooms from another hotel and reselling them.
Credit on other inputs and services stays blocked, so the split of common credit under rules 42 and 43 should be reviewed.
Hotels up to ₹7,500
Demonstration vehicles
Circular
Credit on demonstration vehicles to be clarified.
A circular to clarify the admissibility of input tax credit on demonstration vehicles in certain situations.
Bought
Test drives
Sold later
ITC: circular to clarify
Background
Dealers capitalise vehicles used for test drives and sell them later. Field formations have treated them as motor vehicles blocked under section 17(5)(a), and views have differed.
Bottom lineAuto dealers should await the circular before changing their current treatment, and keep records showing each vehicle was used for test drives and later sold.
Section 17(5)(a)
Clarificatory circulars
Circular
Circulars promised to settle ISD credit distribution and the section 17(4) credit option for banks and NBFCs.
The Input Service Distributor mechanism for distribution of input service credit.
Credit for banks, financial institutions and NBFCs opting for section 17(4).
Bottom lineMulti-location businesses distributing head office service credit through an ISD, and banks and NBFCs on the 50% option, should hold any change in practice until the circulars issue.
Section 17(4), ISD
Time limit alignment
Act amendment
The GSTR-1 and GSTR-3B deadlines move in step with the credit deadline.
Sections 16, 37 and 39 amended so that the time limits for filing the outward statement and the return align with the time limit for availing credit under section 16(4).
Bottom lineAligns the time limits for filing outward statements and returns with the time limit for claiming credit.
Effective date On issue of the law amendment, rule, notification or circular, unless a specific date is shown on the card.
The character of a GST proceeding changes here. Arrest by GST officers goes, prosecution focuses on fraudulent conduct, and small notices stop.
Power of arrest
ReliefAct amendment
Section 69 goes. The proper officer under GST loses the power to arrest.
The Council has recommended complete withdrawal of the proper officer's power of arrest by omission of section 69 of the CGST Act. This is a full deletion, not a restriction to serious cases.
What goes is arrest by the tax officer. Prosecution for fraud continues under section 132, through the courts.
Summons under section 70, and search and seizure under section 67, are not touched by the release.
Background
Section 69 allowed a Commissioner to authorise a proper officer to arrest where the tax evaded or credit wrongly taken exceeded ₹2 crore.
Concerns were raised about arrests and payments made during searches. CBIC issued Instructions 01/2022-23 on payments during search and 02/2022-23 on conditions for arrest.
In Radhika Agarwal v. Union of India (27 February 2025), the Supreme Court held that arrest needs recorded reasons based on material, that criminal procedure safeguards apply, and that payments made under coercion can be challenged.
Bottom lineTax disputes go back to being tax disputes. A business facing a mismatch, a classification question or a credit dispute will deal with notices and hearings, not the threat of custody. Fraud remains a criminal matter.
Criminal exposure starts at ₹5 crore and is focused on fraudulent conduct.
₹1 crore→₹5 crore
Clause (i) of section 132(1) is omitted. The words "evades tax" go from clause (e), and "or in any other manner deals with" goes from clause (h).
Clause (c), on fraudulent credit, is narrowed to credit taken without receipt of goods or services, or without an invoice or bill.
Punishment for the various offences under section 132 is to be rationalised.
Background
Section 132 scales punishment by amount: up to five years above ₹5 crore, three years between ₹2 crore and ₹5 crore, and one year between ₹1 crore and ₹2 crore.
The 48th Council (2022) raised the threshold for launching prosecution to ₹2 crore, except fake invoicing which stayed at ₹1 crore, and decriminalised obstruction, tampering with evidence and failure to supply information.
Broad words such as "evades tax" in clause (e) and "deals with" in clause (h) left room to threaten prosecution even in ordinary disputes.
Bottom lineA classification, valuation or interpretation dispute is unlikely to attract prosecution. Fake invoicing stays criminal.
No notice below ₹10,000, and that applies to pending matters.
A minimum threshold of ₹10,000 (CGST plus SGST plus IGST plus cess) for issuing a show cause notice under sections 73, 74 and 74A.
A statutory provision that notices and appeals below ₹10,000 that are pending when the threshold comes into force will be decided as if the threshold had applied when the notice was issued.
Penalty to be deemed a charge where the full tax is paid voluntarily with interest and penalty within the specified time.
Reduced penalty of 5% in non-fraud cases where tax and interest are paid within 30 days (section 73) or 60 days (section 74A) of the adjudication order.
The minimum penalty of ₹10,000 in non-fraud cases is removed.
The maximum general penalty under section 125 falls from ₹25,000 to ₹10,000.
A circular on the quality of notices and orders, timely issuance, invocation of fraud only on merits, natural justice and the conduct of personal hearings.
Effective₹10,000 floor applies to notices and appeals pending on the date it comes into force
Bottom lineList every pending notice and appeal below ₹10,000 now. Those drop away by statute. For larger non-fraud demands, the 5% penalty on payment within 30 days changes the arithmetic of settling versus contesting a weak point.
Pre-deposit on penalty-only orders is capped at ₹40 crore.
Provisos to sections 107(6) and 112(8) amended to cap pre-deposit at ₹40 crore (₹20 crore CGST and ₹20 crore SGST) for appeals before the Appellate Authority or the Tribunal where the order involves only penalty and no tax demand.
Bottom lineThe 10% pre-deposit still applies. The cap matters only where 10% of the penalty would exceed ₹40 crore, that is, penalties above ₹400 crore, typically large fake invoicing penalties on co-noticees under section 122.
Sections 107(6), 112(8)
E-way bill and interception
ReliefAct amendment
No interception in transit states, and none without a Joint Commissioner's authorisation.
A conveyance can be intercepted only on specific intelligence and with the authorisation of an officer not below Joint Commissioner.
Inspection, detention or seizure only where the supplier or the recipient is located or registered in the state of interception. No interception in transit states.
Where no e-way bill has been generated, or the conveyance carries no document showing origin or destination, goods can be inspected, detained or seized irrespective of jurisdiction.
Confiscation under section 130 will not apply to goods or conveyances in transit.
Bottom lineThe roadside stop in a state you neither ship from nor sell into ends. But a vehicle without an e-way bill or proper documents can still be stopped anywhere, so keep every consignment fully documented.
A hearing before your credit ledger stays blocked.
Rule 86A amended to let the taxpayer file an objection against blocking of the electronic credit ledger and be heard in person before the officer decides on it.
Bottom lineBlocking under rule 86A has been used as a recovery tool without a hearing. Courts have already limited it: in Best Crop Science Pvt Ltd v. Principal Commissioner (Delhi HC, 24 September 2024), blocking was confined to credit actually available in the ledger, with no negative blocking, and the Supreme Court declined to interfere with a similar Punjab and Haryana HC view in Union of India v. K.K. Alloys. File the objection immediately on blocking, with the vendor documents attached.
Rule 86A
Faceless CGST administration
Briefing announcementCentral Government
One window, without personal visits, for CGST taxpayers spread across several jurisdictions.
Announced by the Finance Minister at the press briefing as an initiative of the Central Government. It was not on the Council's agenda and is not part of the release.
CGST office 1CGST office 2CGST office 3
One windowFaceless
Handled through the single window
Scrutiny of returnsAuditAdjudicationAppealTaxpayer servicesGrievance redressal
69.5 lakhTaxpayers only under CGST jurisdiction
~2 lakhOf them under more than one CGST jurisdiction
2027-28Implementation, after public consultation
Draws on the faceless approach already adopted in income tax.
About 69.5 lakh taxpayers fall exclusively under CGST jurisdiction. About 2 lakh of them are under more than one CGST jurisdiction, within one state or across states.
For these taxpayers, a centralised administration with one window for scrutiny of returns, audit, adjudication, appeal, taxpayer services and grievance redressal.
Faceless tax administration to be introduced for them. Registration and refund are already largely system-driven.
The framework will be finalised and placed for public consultation before the next Union Budget, and implemented during 2027-28.
Bottom lineGroups registered in several states, or under several CGST commissionerates, will deal with one window instead of many offices, and without personal visits. Proceedings become more uniform and easier to track. Review the draft framework when it is released and use the consultation to raise practical points.
Effective date On issue of the law amendment, rule, notification or circular, unless a specific date is shown on the card.
Registration
Circular and portal
New registration: a prescribed list of documents, selected from drop-down boxes in REG-01, so the documents to be furnished are clear upfront.
A comprehensive circular with FAQs specifying the documents and information required for registration.
FORM REG-01 amended to provide drop boxes for selection of the prescribed documents, so both taxpayer and officer know what has to be furnished.
A guided portal interface with navigational paths, drop-down lists, tool-tips and contextual guidance.
Bottom lineQueries for documents outside the prescribed list should reduce. Automatic registration under rule 14A, for applicants passing on credit up to ₹2.5 lakh a month, continues as it is.
Every amendment except the principal place of business goes through automatically.
Rule 19 amended for automatic acceptance of amendments to all registration particulars on the portal, except those relating to the principal place of business.
For taxpayers registered under rule 14A, amendments to all particulars, including the principal place of business, are accepted automatically.
Bottom lineAdding a director, a godown or a trade name stops being a wait. A change of principal place still goes to an officer unless you came in through the automatic route.
Cancellation on application becomes automatic once returns are filed and dues paid.
Phase 1: REG-16 accepted automatically where the taxpayer has not passed on credit above ₹2.5 lakh in any month since registration, or has done so but filed GSTR-10 in time.
Phase 2: all cancellation applications accepted automatically once pending returns are filed and dues paid, with GSTR-10 details furnished in REG-16 itself.
Certain grounds for cancellation by officers are omitted from rule 21. Rules 21A and 22 amended and rule 23A inserted for system-based cancellation and revocation on non-filing of returns or non-furnishing of bank details, and on subsequent compliance.
Bottom lineClosing a registration becomes faster and simpler. The system-based suo motu cancellation cuts both ways: a bank account left unfurnished will cancel a registration without an officer looking at it.
An e-commerce warehouse can be your registered place of business in another state.
Rule 14B inserted: a small supplier of goods through an e-commerce operator, with no physical presence in a state and passing on credit of not more than ₹2.5 lakh a month excluding stock transfers, may declare the operator's warehouse in that state as the principal place of business.
Registration granted automatically by the system, subject to conditions.
Bottom lineThis removes the main reason small sellers avoid holding stock in other states. The ₹2.5 lakh credit limit is the gate, so model the credit you pass on before relying on it.
GSTR‑3B can be corrected to match GSTR‑1 and GSTR‑2B within the return system, from the April 2027 return.
GSTR-1with 1A and IFF
LiabilityRule 61(1A)
GSTR-3B
CreditRule 61(1B)
GSTR-2Bthrough IMS
Correct liability
GSTR-1, 1A and IFF enhanced for reconciliation with GSTR-3B
Rule 61(1A): liability in GSTR-3B corrected to align with GSTR-1
Correct credit
Rule 61(1B): credit in GSTR-3B corrected to align with GSTR-2B
Rule 60(6A): IMS in the rules, with accept, reject and pending, and a time limit for keeping a credit note pending
New statements
Rule 86D: reverse charge tax paid and credit claimed
Rule 86C: credit reversal and reclaim
DRC-03 with invoice details, and a circular on reporting credit and reversal under IMS
The mechanism goes for public consultation first. The Finance Minister is authorised to approve changes based on feedback.
EffectiveFrom the return for April 2027
Bottom lineCorrections now made by hand at month-end move into the return itself from April 2027. IMS becomes a regular task for the accounts payable team, and the time allowed to keep a supplier's credit note pending will decide when it affects your credit.
From return of April 2027Rules 60, 61, 86C, 86D
Small taxpayers
Relief
Annual return with quarterly payment, and no late fee if you file within the month.
In-principle approval of a concept note for an optional Annual Return Quarterly Payment scheme for turnover up to ₹5 crore in the preceding year, where supplies are only to unregistered persons.
Late fee waived on delayed filing of the section 39(1) return for turnover up to ₹5 crore, if the return is filed by the end of the month in which it was due.
Bottom lineThe late fee waiver helps every small filer who misses the due date but files by the end of that month. The annual return scheme is approved only in principle, and the detailed rules will follow. It is meant for businesses that sell only to unregistered customers. A business that also supplies to registered buyers will not qualify.
Bunching of notices across financial years to be validated by law.
A validation clause in the CGST Act for notices that courts have held invalid on the ground of bunching, that is, a single notice covering more than one financial year.
Background
Sections 73 and 74 allow a notice "for any period", but the time limit under sections 73(10) and 74(10) runs separately for each financial year. Departments often issued one notice covering several years.
Not permitted: the Madras High Court in Titan Company Ltd v. Joint Commissioner (2024) held that a single notice cannot cover more than one financial year, since limitation runs year by year. Later Madras High Court rulings followed this view.
Permitted: the Delhi High Court in Ambika Traders v. Additional Commissioner, DGGSTI (29 July 2025) upheld a consolidated notice under section 74, holding it may even be needed where fraudulent credit runs across years.
The validation clause settles this split by law.
Bottom lineThis is the one burden item in the release for litigants. If a pending defence rests on bunching of notices, that ground will fall away once the clause is enacted, and the matter will have to be argued on merits. Limitation must still be checked year by year, and the retrospective validation may itself face challenge.
Validation clause
E-invoicing
CautionRules
E-invoicing extends to reverse charge purchases and import of services.
E-invoicing extended to domestic supplies received from unregistered persons where tax is payable under reverse charge, and to import of services, for taxpayers with aggregate annual turnover of ₹5 crore and above.
Bottom lineSelf-invoices raised under reverse charge, and invoices for imported services, will need to be generated as e-invoices. Businesses above ₹5 crore should prepare their ERP and approval workflow for these documents.
Turnover ₹5 crore and above
E-commerce operators, section 9(5)
CautionAct amendment
Platforms pay GST on notified services, whatever their business model.
Section 9(5) amended to make the e-commerce operator liable to pay tax on notified services irrespective of the business model it follows.
Background
Under section 9(5), the operator pays GST on notified services supplied through its platform, such as cab rides, accommodation, housekeeping and restaurant services, as if it were the supplier.
Some platforms argued they were only a technology or listing service, charging drivers or vendors a flat subscription instead of a commission, or letting customers pay the provider directly, and so fell outside section 9(5).
Bottom lineIf a notified service is booked through your platform, you pay the tax, whether you earn by commission or subscription and whether or not you collect the payment. Platforms on subscription or similar models should review their position.
Effective date On issue of the law amendment, rule, notification or circular, unless a specific date is shown on the card.
No change to the rate structure. The two cards below carry the rate recommendations with a business impact; the goods and services tables that follow list the remaining clarifications and exemptions.
Delivery through e-commerce
Rate notificationCaution
Platform-linked delivery services move to 5% without credit. Where the delivery person is unregistered, the operator pays.
5% without ITC
Delivery services, other than courier and postal, supplied through an e-commerce operator by a person not liable for registration, brought under section 9(5) so the operator pays, at 5% without credit.
Delivery services in relation to goods supplied or ordered through an e-commerce operator at 5% without credit.
The GTA exemption under entry 21A of notification 12/2017 withdrawn for goods supplied or ordered through an e-commerce operator.
Bottom linePlatforms pick up the tax on the rider leg, and the GTA exemption that some logistics arrangements relied on for platform orders is gone. Model the restricted credit against the old position before assuming this is cheaper.
An option of 5% with restricted credit for EV passenger transport and rental.
Option to pay 5% with restricted credit on passenger transport and rental of motor vehicles with operator, where the service uses an electric vehicle and the cost of battery charging is in the consideration.
A clarification on statutory and ancillary recoveries in motor vehicle leasing: registration charges, road tax, insurance and FASTag recovered from the lessee.
Bottom lineThe 5% option should be exercised only after a comparative evaluation against the existing 18% rate with full credit. Operators with significant investment in vehicles and charging infrastructure may find the 18% rate more beneficial, as the credit on capital goods would otherwise be lost.
Effective date On issue of the law amendment, rule, notification or circular, unless a specific date is shown on the card.
Export of services
ReliefIGST Act amendment
Services through your foreign branch, and work on a foreign client's goods, qualify as export.
Section 2(6)(v) of the IGST Act omitted, removing the condition that supplier and recipient must not be establishments of a distinct person. Services supplied to or through foreign offices and branches can qualify as export and claim refund.
Section 13(3)(a) omitted: for services on goods made physically available by the recipient, the place of supply becomes the recipient's location under section 13(2), opening export benefit for testing, repair, processing and similar work for foreign recipients.
A circular on receipt of payment in foreign exchange or in Indian rupees, as permissible, for export of goods and services.
Explanation to section 16(1) of the IGST Act: goods supplied to an overseas buyer but delivered in an SEZ or FTWZ, with payment in convertible foreign exchange or in rupees where permitted by the RBI, are deemed supplied to the SEZ or FTWZ and zero-rated.
Bottom lineCapability centres, IT and engineering groups billing through an overseas branch, and job workers testing or repairing imported client material, move from 18% to zero-rated with refund, subject to the other export conditions. Review the structure and the invoicing chain before the amendment, so the first refund claim after it is clean.
Transfer of title in IPR is a service, whether temporary or permanent.
Schedule II amended so that transfer of title in intellectual property rights, temporary or permanent, is uniformly treated as a supply of services.
Bottom lineThe goods-versus-services dispute on permanent IPR transfers, which decided place of supply and export treatment for cross-border deals, is settled on the services side.
Schedule II
Goods: clarifications and rate changes
8 items
Effective date On issue of the rate notification or circular. Regularisation of past cases is noted where recommended.
Item
What changes
What it means
Sublimation paper
Classification settled: it falls under heading 4809.
Classification disputes end. Past cases are regularised as is where is, so no demand and no refund for earlier periods.
Toys
The toy entries in the rate schedule cover all toys under heading 9503, such as dolls and puzzles, not only tricycles, scooters and pedal cars.
Makers and sellers apply the same entries across their whole toy range. Disputes over toys outside the three named items end.
Seaweed extract bio-stimulants
Those registered under Schedule VI of the Fertiliser Control Order are classified as fertilisers under heading 3101.
They get fertiliser treatment under Sr. 237 of Schedule I. Past cases are regularised as is where is, so no demand and no refund for earlier periods.
Second-hand vehicles under the margin scheme
Dealers may take credit on spares, repairs, technology services, rent, marketing and advertisement. Only tax on the used vehicle bought stays blocked.
Used-car dealers recover the GST on their running costs.
Plastic, electrical and electronic waste, tyre scrap, used cooking oil
Reverse charge applies when an unregistered person sells to a registered buyer. TDS at 2% applies when a registered person sells to a registered buyer.
Recyclers buying from unregistered collectors pay the tax themselves, even if the seller is below the threshold. B2B purchases attract 2% TDS. Q&A
Psyllium (isabgol) seeds
Nil rate, whether fresh, chilled, frozen or dried.
No GST on isabgol seeds in any form.
Retreaded tractor tyres
Rate aligned with that on new tractor tyres.
Retreaded and new tractor tyres are taxed alike.
Canteen Stores Department and unit run canteens
Compensation cess not levied in the past is exempted: two and four wheelers sold by CSD from 1 Jul 2017 to 30 Sep 2022, and aerated drinks sold by CSD and unit run canteens from 1 Jul 2017 to 31 Mar 2022.
No cess demand for those periods.
Services: exemptions and clarifications
9 items
Effective date On issue of the rate notification or circular. Regularisation of past cases is noted where recommended.
Item
What changes
What it means
Helicopter passenger transport on seat-sharing basis
Exempt, from or to airports and helipads in the north-eastern states, Sikkim and Bagdogra.
No GST on these tickets.
Storage and warehousing of seeds for sowing
Exempt.
No GST on warehousing charges for sowing seeds.
Curing of coffee
Exempt, where coffee curers provide it to cultivators.
Treated as an agricultural support service, with no GST.
Seamen's Provident Fund Organisation
Exempt, for services to persons under the Seamen's Provident Fund Act, 1966.
No GST on SPFO services to its members.
Research and development services
The head of the institution can self-certify that the work is research and not consultancy, for the exemption under entry 44A.
Research institutions prove eligibility for the exemption with a self-certificate. Q&A
Indian establishment of a foreign shipping line
Import of services from a related person or its overseas establishment, without consideration, is exempt. Past periods are regularised as is where is.
No tax on intra-group services received free, and no demand for the past.
Toll operate transfer projects
The right granted by the government or NHAI to a concessionaire to collect toll, against the upfront amount, is exempt.
No GST on the upfront concession amount paid to NHAI.
Operation and maintenance under toll operate transfer
A special procedure for valuation and time of payment of GST on O&M services by the concessionaire.
Clarity on how much tax to pay on O&M, and when.
Fund transfer pricing in banks
Notional interest on funds moved between branches is covered by the definition of "interest".
Treated as interest, so no GST on these inter-branch book entries.
Dates to diarise
5 dates
Date
What happens
Who it affects
23 Oct 2017
Rule 96(10) omission takes effect retrospectively
Exporters who paid IGST on exports after importing under advance authorisation
1 Nov 2026
Refund of accumulated credit on input services, for credit availed on or after this date
Inverted duty structure businesses
1 Apr 2027
Refund of capital goods ITC at 1/60 a month, for ITC availed on or after this date
Exporters and inverted duty businesses
April 2027 return
New mechanism for correcting liability and credit in returns, with IMS in the rules
Every registered person
On notification
Everything else, including arrest, prosecution, the ₹10,000 floor and the section 17(5) credits
Every registered person
To Do
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