Important Keyword: Notification No. 02/2026 Central Tax, GST Notification 02/2026, GSTAT Principal Bench, Section 101A CGST Act, Section 101B CGST Act, GST Appellate Tribunal, GSTAT New Delhi, GST Advance Ruling Appeal, Principal Bench GSTAT, GST Litigation 2026,
Words: 1056 Read time: 6 minutes.
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[F. No. A-50/2/2026-GSTAT-DOR] GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE
New Delhi, dated the 7th May, 2026
Notification No. 02/2026 – Central Tax: Seeks to empower the Principal Bench of the Appellate Tribunal, New Delhi constituted under sub-section (3) of section 109 of the said Act to hear appeals made under section 101B of the said Act.
[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB SECTION (ii)]
S.O. 2286(E).— In exercise of the powers conferred by sub-section (1A) of section 101A of the Central Goods and Services Tax Act, 2017 (12 of 2017) (hereinafter referred to as the said Act), the Central Government, on the recommendations of the Council, hereby empowers the Principal Bench of the Appellate Tribunal, New Delhi constituted under sub-section (3) of section 109 of the said Act, to hear appeals made under section 101B of the said Act.
2. This notification shall be deemed to have come into force on the 1st day of April, 2026.
Q1. What is Notification No. 02/2026 – Central Tax?
Answer: Notification No. 02/2026 – Central Tax empowers the Principal Bench of the Goods and Services Tax Appellate Tribunal (GSTAT), New Delhi to hear appeals filed under Section 101B of the CGST Act, 2017. The notification has been issued by the Central Government on the recommendations of the GST Council under Section 101A(1A) of the CGST Act and is deemed to have come into force from 1 April 2026.
Q2. What is the main objective of this notification?
Answer: The primary objective is to clearly authorize the Principal Bench of GSTAT to hear appeals arising under Section 101B of the CGST Act. In simple terms, the notification removes any uncertainty about which appellate authority will hear appeals relating to decisions passed under the advance ruling provisions. This ensures consistency in handling such appeals across India.
Q3. Which GSTAT Bench has been empowered under this notification?
Answer: The notification specifically empowers the Principal Bench of the Appellate Tribunal located in New Delhi, constituted under Section 109(3) of the CGST Act. Many businesses actually face confusion regarding whether State Benches or the Principal Bench will hear certain appeals. This notification clearly assigns jurisdiction for appeals under Section 101B to the Principal Bench.
Q4. Which provision gives the Government the power to issue this notification?
Answer: The notification has been issued under Section 101A(1A) of the CGST Act, 2017. This provision empowers the Central Government, based on the recommendations of the GST Council, to specify the Appellate Tribunal that will hear appeals under Section 101B. The notification is therefore an administrative implementation of the statutory framework established under the CGST Act.
Q5. What is Section 101B of the CGST Act?
Answer: Section 101B deals with appeals against certain orders relating to the National Appellate Authority for Advance Ruling framework under GST. If you look at it practically, businesses seeking certainty on GST implications often rely on advance rulings. This provision ensures that eligible disputes arising from such rulings can be heard by the designated Appellate Tribunal instead of creating uncertainty about the appropriate appellate forum.
Q6. From when is Notification No. 02/2026 applicable?
Answer: Although the notification was issued on 7 May 2026, it has been given retrospective effect from 1 April 2026. This means the Principal Bench is deemed to have been empowered from that date. Businesses and tax professionals should therefore consider 1 April 2026 as the effective date while determining the appropriate appellate forum.
Q7. Does this notification change GST rates or compliance requirements?
Answer: No. This notification does not affect GST rates, return filing, input tax credit, or registration procedures. Its purpose is purely procedural. It only identifies the competent appellate authority for appeals under Section 101B. Therefore, taxpayers should not interpret it as introducing any new tax liability or compliance obligation.
Q8. Who is likely to be affected by this notification?
Answer: The notification is particularly relevant for businesses, tax professionals, legal practitioners, and taxpayers involved in advance ruling disputes under GST. Let’s understand this with an example. Suppose a company receives an order that is appealable under Section 101B. After this notification, it is clear that such an appeal will be heard by the Principal Bench of GSTAT, New Delhi, thereby removing jurisdictional uncertainty.
Q9. Why is this notification important for GST litigation?
Answer: The notification strengthens the GST appellate framework by clearly assigning jurisdiction to the Principal Bench. Earlier, there could have been uncertainty regarding which bench should hear appeals covered under Section 101B. By expressly empowering the Principal Bench, the Government has promoted procedural clarity, consistency, and smoother administration of GST appellate proceedings.
Q10. Does this notification amend the CGST Act?
Answer: No. The notification does not amend any provision of the CGST Act. Instead, it exercises powers already available under Section 101A(1A) to operationalise the appellate mechanism. In simple terms, the law already permitted such empowerment, and this notification formally identifies the Principal Bench as the competent authority. Related Resource: GST Compliance: https://finodha.in/gst-compliance/
Important Keyword: CGST Fifth Amendment Rules 2025, Rule 31D GST, RSP valuation GST, Rule 86B amendment, GST tobacco valuation, pan masala GST rules
Words: 1462 Read time: 8 minutes.
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[F. No. CBIC-20001/2/2025-GST] GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE) (CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS)
New Delhi, the 31st day of December, 2025
Notification No. 20/2025 – Central Tax: Seeks to notify Central Goods and Services Tax (Fifth Amendment) Rules, 2025
[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 164 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby makes the following rules further to amend the Central Goods and Services Tax Rules, 2017, namely: —
Short title and commencement. (1) These rules may be called as the Central Goods and Services Tax (Fifth Amendment) Rules, 2025.
(2) They shall come into force from 1st day of February, 2026.
In the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as the said rules), after rule 31C, the following rule shall be inserted, namely: —
"31D. Value of supply of goods on basis of retail sale price. -(1) Notwithstanding anything contained in the provisions of this Chapter, the value of supply of goods bearing the description specified in column (3), falling under the corresponding Chapter/ heading/ sub-heading/ tariff item specified in column (2), of the Table below, shall be deemed to be the retail sale price declared on such goods, less the amount of tax as applicable, namely: -
Table
S. No.
Chapter / Heading /Sub-heading / Tariff item
Description of Goods
(1)
(2)
(3)
1.
2106 90 20
Pan masala
2.
2401
Unmanufactured tobacco; tobacco refuse [other than tobacco leaves]
3.
2402
Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes
4.
2403
Other manufactured tobacco and manufactured tobacco substitutes; “homogenised” or “reconstituted” tobacco; tobacco extracts and essences (other than biris)
5.
2404 11 00
Products containing tobacco or reconstituted tobacco and intended for inhalation without combustion
6.
2404 19 00
Products containing tobacco or nicotine substitutes and intended for inhalation without combustion
The amount of applicable tax referred to in sub-rule (1) shall be determined in the following manner, namely: —
Tax amount = (Retail sale price X tax rate in % of applicable taxes) / (100+ sum of applicable tax rate).
Explanation. — For the purposes of this rule, —
“applicable tax” means IGST or CGST or SGST or UTGST as the case may be.
"retail sale price" means the maximum price declared on goods at which such goods in packaged form may be sold to the ultimate consumer and includes all taxes, duties, surcharge or cess by whatever name called;
where on the package of any specified goods more than one retail sale price is declared, the maximum of such retail sale price shall be deemed to be the retail sale price;
where the retail sale price declared on packages of any specified goods is altered to increase the retail sale price at any stage before, during, or after the supply, such altered retail sale price shall be deemed to be the retail sale price;
where different retail sale prices are declared on different packages for the sale of any specified goods above in packaged form in different areas, each such retail sale price shall be the retail sale price for the purposes of valuation of the specified goods intended to be sold in the area to which the retail sale price relates.".
In the said rules, in rule 86B, in the first proviso, after clause (e), the following clause shall be inserted, namely: —
"(f) the registered person other than a manufacturer shall be exempted from the provisions of this rule only in respect of goods specified under rule 31D, on which the tax has been paid by the supplier on the basis of retail sale price:".
[F. No. CBIC-20001/2/2025-GST] (Kriti Pandey) Under Secretary
Note: The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide notification No. 3/2017-Central Tax, dated the 19th June, 2017, published vide number G.S.R. 610(E), dated the 19th June, 2017 and were last amended, vide notification No. 18/2025– Central Tax, dated the 31st October, 2025, vide number G.S.R. 805(E), dated the 31st October, 2025.
Q1: What is Notification No. 20/2025 – Central Tax?
Answer: Notification No. 20/2025 – Central Tax notifies the CGST (Fifth Amendment) Rules, 2025, inserting Rule 31D for RSP-based valuation and amending Rule 86B, effective from 1 February 2026 20-2025-ct.
Q2: Which legal section empowers this notification?
Answer: The notification is issued under Section 164 of the CGST Act, 2017, which allows the Government to frame and amend GST rules.
Q3: From when do the Fifth Amendment Rules, 2025 apply?
Answer: The rules come into force from 1st February 2026, as clearly stated in Notification No. 20/2025 – Central Tax.
Q4: What is Rule 31D under CGST Rules?
Answer: Rule 31D mandates that the value of supply for specified goods shall be Retail Sale Price (RSP) declared on the package, minus applicable tax, overriding all other valuation rules.
Q5: How is GST tax amount calculated under Rule 31D?
Answer: The tax amount is calculated using the formula: Tax = (RSP × applicable tax rate) / (100 + total applicable tax rate) This ensures GST is embedded in the RSP.
Q6: What does “Retail Sale Price” mean under Rule 31D?
Answer: Retail Sale Price means the maximum price declared on the package, inclusive of all taxes, cess, surcharge, and duties, at which goods may be sold to the ultimate consumer.
Q7: If multiple RSPs are printed on a package, which one applies?
Answer: The highest RSP printed on the package shall be treated as the RSP for GST valuation.
Q8: What if RSP is increased after packaging?
Answer: If RSP is altered upwards at any stage—before, during, or after supply—the increased RSP becomes the valuation base.
Q9: Does Rule 31D apply to unpackaged or loose goods?
Answer: No. Rule 31D applies only to packaged goods where RSP is declared.
Q10: How does Notification No. 20/2025 affect Rule 86B?
Answer: A new clause (f) is inserted in Rule 86B, providing that registered persons (other than manufacturers) are exempt from the 1% cash-payment rule for goods covered under Rule 31D, provided tax has been paid on RSP basis by the supplier.
Q11: Who benefits from the Rule 86B amendment?
Answer: Distributors Wholesalers Traders of tobacco & pan masala They get cash-flow relief where GST is already paid upstream on RSP basis.
Q12: Does this notification impact Input Tax Credit (ITC)?
Answer: No direct restriction on ITC is imposed. However, mismatch in RSP valuation may lead to disputes and ITC reversals during audits. 👉 Ensure clean compliance with Finodha GST Return Filing: https://finodha.in/gst-return-filing/
Q13: Real-life example for easy understanding?
Answer: 🧾 Example: A cigarette pack shows an RSP of ₹200 (inclusive of GST). GST must be calculated from ₹200, not from dealer invoice price—even if sold at a discount.
Q14: What penalties apply for non-compliance?
Answer: Demand under Section 73/74 Interest under Section 50 Penalty for incorrect valuation or RSP declaration
Q15: How can Finodha help with Fifth Amendment compliance?
Answer: Finodha assists with: GST valuation advisory Rule 31D implementation Rule 86B impact analysis GST returns, audits & litigation support 👉 Speak to a Finodha GST Expert today: https://finodha.in/gst-compliance/
✅ Conclusion
Notification No. 20/2025 – Central Tax introduces structural GST valuation reforms by embedding RSP-based taxation directly into CGST Rules via Rule 31D, along with cash-flow relief under Rule 86B.
Important Keyword: GST rate on tobacco 2026, pan masala GST rate, cigarette GST 40%, Notification 19/2025 GST, tobacco GST amendment, CGST rate notification 2025,
Words: 1091 Read time: 6 minutes.
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[F. No. CBIC-190349/73/2025-TRU] GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE)
New Delhi, the 31st December, 2025
Notification No. 19/2025 - Central Tax (Rate): Seeks to amend Notification 09/2025- Central Tax (Rate), to prescribe GST rates on tobacco products.
[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 sub-section (1) of section 9 and sub-section (5) of section 15 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby makes the following amendments in the notification of the Government of India, Ministry of Finance (Department of Revenue), No. 9/2025- Central Tax (Rate), published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 641(E), dated the 17th September, 2025, namely:-
In the said notification, -
in the Schedule II – 9%, after S. No. 4 and the entries relating thereto, the following serial number and entries shall be inserted, namely: -
“4A.
2403 19 21, 2403 19 29
Biris;”;
in the Schedule III – 20%, after S. No. 13 and the entries relating thereto, the following serial number and entries shall be inserted, namely: -
“14.
2106 90 20
Pan masala;
15.
2401
Unmanufactured tobacco; tobacco refuse [other than tobacco leaves];
16.
2402
Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes;
17.
2403 (other than 2403 19 21, 2403 19 29)
Other manufactured tobacco and manufactured tobacco substitutes; homogenised or reconstituted tobacco; tobacco extracts and essences [other than biris];
18.
2404 11 00
Products containing tobacco or reconstituted tobacco and intended for inhalation without combustion;
19.
2404 19 00
Products containing tobacco or nicotine substitutes and intended for inhalation without combustion.”;
the Schedule VII – 14%, and the entries relating thereto shall be omitted.
2. This notification shall come into force on the 1st day of February, 2026.
[F. No. CBIC-190349/73/2025-TRU] (Dheeraj Sharma) Under Secretary
Note: The principal notification No. 9/2025- Central Tax (Rate), dated the 17th September, 2025, was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 641(E), dated the 17th September, 2025.
Q1: What is Notification No. 19/2025 – Central Tax (Rate)?
Answer: Notification No. 19/2025 – Central Tax (Rate) amends Notification No. 09/2025 – Central Tax (Rate) to revise GST rates on tobacco, pan masala, cigarettes, and nicotine products, effective from 1 February 2026 19-2025-CTR-Eng.
Q2: From which date are the revised GST rates applicable?
Answer: The revised GST rates apply from 1st February 2026, as explicitly stated in the notification.
Q3: Which products are shifted to the highest GST slab?
Answer: Products like pan masala, cigarettes, manufactured tobacco, and nicotine inhalation products are shifted to 40% GST (20% CGST + 20% SGST).
Q4: What is the GST rate on biris after this notification?
Answer: Biris are now taxed at 18% GST under Schedule II (9% CGST + 9% SGST).
Q5: Why was Schedule VII (14% CGST) removed?
Answer: The omission simplifies GST structure and ensures tobacco products are taxed at higher, uniform rates, reducing classification disputes.
Q6: Does this notification affect GST valuation also?
Answer: Yes. It works in conjunction with Section 15(5) and RSP-based valuation rules, ensuring higher effective tax collection.
Q7: Will this impact retail prices of cigarettes and pan masala?
Answer: Yes 🚨. Higher GST rates will increase final consumer prices, especially where RSP-based valuation applies.
Q8: Is this applicable to both manufacturers and traders?
Answer: Yes. The revised rates apply across the supply chain—manufacturers, wholesalers, and retailers.
Q9: Are nicotine substitutes and vaping products covered?
Answer: Yes. Products under HSN 2404 11 00 and 2404 19 00 are specifically included at 40% GST.
Q10: Does this notification change Input Tax Credit (ITC) eligibility?
Answer: No direct ITC restriction is imposed. However, rate mismatches or incorrect classification may lead to ITC disputes. 👉 Ensure accurate returns with Finodha GST Return Filing: https://finodha.in/gst-return-filing/
Q11: Real-life example for clarity?
Answer: 🧾 Example: A cigarette pack sold at ₹200 earlier taxed at 28% will now attract 40% GST, significantly increasing tax outflow and retail price.
Q12: What happens if old GST rates are charged after 1 Feb 2026?
Answer: Charging incorrect rates may result in: Tax demand under Section 73/74 Interest under Section 50 Penalties for short-payment
Q13: How does this affect GST registration & classification?
Answer: Businesses must re-verify HSN codes, pricing systems, and invoices. If expanding operations, fresh registration may be required. 👉 Register correctly with Finodha GST Registration: https://finodha.in/online-gst-registration/
Q14: Does this notification apply uniformly across India?
Answer: Yes. Being a Central Tax (Rate) notification, it applies uniformly across all States & UTs, along with corresponding SGST notifications.
Q15: How can Finodha help businesses impacted by this change?
Answer: Finodha provides: GST rate impact analysis HSN & classification advisory Return filing & audit support Business restructuring guidance 👉 Consult a Finodha GST Expert today: https://finodha.in/gst-compliance/
✅ Conclusion
Notification No. 19/2025 – Central Tax (Rate) marks one of the most significant GST rate hikes for tobacco and pan masala products. With 40% GST slabs, RSP-based valuation, and stricter compliance, businesses must act before 1 February 2026.
Important Keyword: Notification 03/2025 Compensation Cess, GST cess on tobacco, compensation cess removed 2026, tobacco GST cess nil, GST compensation cess update, GST law amendment 2025,
Words: 1966 Read time: 10 minutes.
Table of Contents
[F. No. CBIC-190349/75/2025-TRU] GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE)
New Delhi, the 31st December, 2025
Notification No. 03/2025 - Compensation Cess (Rate): Seeks to amend Notification 01/2025- Compensation Cess Tax (Rate), to prescribe GST rates on tobacco products.
[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUBSECTION (i)]
G.S.R….(E).-In exercise of the powers conferred by sub-section (2) of section 8 of the Goods and Services Tax (Compensation to States) Act, 2017 (15 of 2017), the Central Government, on the recommendations of the Council, hereby makes the following further amendments in the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No. 1/2017-Compensation Cess (Rate), dated the 28th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 720(E), dated the 28th June, 2017, namely :-
In the said notification, in the SCHEDULE, —
against S. No. 1, for the entry in column (4), the entry “Nil” shall be substituted;
against S. No. 1A, for the entry in column (4), the entry “Nil” shall be substituted;
against S. No. 5, for the entry in column (4), the entry “Nil” shall be substituted;
against S. No. 5A, for the entry in column (4), the entry “Nil” shall be substituted;
against S. No. 6, for the entry in column (4), the entry “Nil” shall be substituted;
against S. No. 6A, for the entry in column (4), the entry “Nil” shall be substituted;
against S. No. 7, for the entry in column (4), the entry “Nil” shall be substituted;
against S. No. 7A, for the entry in column (4), the entry “Nil” shall be substituted;
against S. No.8, for the entry in column (4), the entry “Nil” shall be substituted;
against S. No. 9, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 10, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 11, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 12, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 13, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 14, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 15, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 16, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 17, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 18, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 19, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 19A, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 20, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 20A, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 21, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 21A, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 22, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 22A, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 23, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 23A, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 24, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 24A, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 24B, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 24C, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 25, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 26, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 26A, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 27, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 27A, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 28, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 28A, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 29, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 29A, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 30, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 30A, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 31, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 31A, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 32, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 32A, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 33, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 33A, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 34, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 34A, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 35, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 35A, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 36, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 36A, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 36B, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 36C, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 36D, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 36E, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 37, for the entries in column (4), the entry “Nil” shall be substituted;
against S. No. 38, for the entries in column (4), the entry “Nil” shall be substituted.
2. This notification shall come into force on the 1st day of February, 2026.
[F. No. CBIC-190349/75/2025-TRU] (Dheeraj Sharma) Under Secretary
Note: -The principal notification No.1/2017-Compensation Cess (Rate), dated the 28th day of June, 2017, was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 720(E), dated the 28th day of June, 2017, and was last amended vide notification No. 2/2025-Compensation Cess (Rate), dated the 17th September, 2025, published in the Gazette of India, Extraordinary, Part II, Section 3, Subsection (i), vide number G.S.R. 659(E), dated the 17th September, 2025.
Q1: What is Notification No. 03/2025 – Compensation Cess (Rate)?
Answer: It is a GST notification that removes compensation cess on all tobacco and related products by substituting the cess rate as “Nil”, effective from 1 February 2026 03-2025-CompensationCess-Rate-E….
Q2: From which date is compensation cess removed?
Answer: Compensation cess will be Nil from 1 February 2026 for all notified products.
Q3: Which law empowers the government to issue this notification?
Answer: The notification is issued under Section 8(2) of the GST (Compensation to States) Act, 2017.
Q4: Does this mean tobacco products are tax-free now?
Answer: ❌ No. Only compensation cess is removed. Tobacco products will still attract: CGST + SGST / UTGST, or IGST, at very high GST rates (up to 40%) as per other notifications.
Q5: Why has the government removed compensation cess on tobacco?
Answer: The compensation period for states has largely concluded, and GST rate restructuring now relies on higher GST slabs instead of cess.
Q6: Will this reduce the price of cigarettes or pan masala?
Answer: Not necessarily. Although cess is removed, GST rates have been increased, so the overall tax burden may remain high or even increase.
Q7: Does this apply to both domestic supplies and imports?
Answer: Yes. Compensation cess will be Nil for both domestic supplies and imports from 1 Feb 2026.
Q8: What about existing stock manufactured before 1 Feb 2026?
Answer: Cess applicability depends on time of supply, not manufacture date. Supplies made after 1 Feb 2026 will attract Nil cess.
Q9: How should businesses reflect this in GST returns?
Answer: Businesses must: Stop charging compensation cess Update billing software Report supplies without cess in returns 👉 File error-free returns with Finodha GST Return Filing: https://finodha.in/gst-return-filing/
Answer: No. The notification continues to exist, but cess rate for all listed products is now Nil.
Q11: What happens if compensation cess is charged after 1 Feb 2026?
Answer: Charging cess without authority may result in: Refund obligations Interest liabilities Departmental scrutiny
Q12: Does this impact GST registration requirements?
Answer: No direct impact, but businesses should review turnover, classification, and compliance structure. 👉 Register or update details with Finodha GST Registration: https://finodha.in/online-gst-registration/
Q13: Is this change applicable across India?
Answer: Yes. Compensation cess is a central levy and this notification applies uniformly across India.
Q14: Real-life example for clarity?
Answer: 🧾 Example: A cigarette manufacturer who earlier charged GST + compensation cess will now charge only GST, simplifying invoicing and reporting.
Q15: How can Finodha help businesses after this change?
Answer: Finodha helps with: GST & cess impact analysis Invoice & ERP updates Return filing & advisory Business restructuring support 👉 Consult a Finodha GST Expert today!
✅ Conclusion:
Notification No. 03/2025 – Compensation Cess (Rate) marks the complete removal of compensation cess on tobacco products from 1 February 2026. While cess is gone, high GST rates remain, making compliance and correct classification more critical than ever.
Important Keyword: Notification No. 19/2025 UTGST, Union Territory GST on tobacco, UTGST rate on cigarettes, pan masala GST UT, tobacco GST 2026, GST notification Union Territory
Words: 1072 Read time: 6 minutes.
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[F. No. CBIC-190349/73/2025-TRU] GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE)
New Delhi, the 31st December, 2025
Notification No. 19/2025 - Union Territory Tax (Rate): Seeks to amend Notification 09/2025- Integrated Tax (Rate), to prescribe GST rates on tobacco products.
[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 sub-section (1) of section 7 of the Union Territory Goods and Services Tax Act, 2017 (14 of 2017) and sub-section (5) of section 15 of the Central Goods and Services Tax Act, 2017(12 of 2017), the Central Government, on the recommendations of the Council, hereby makes the following amendments in the notification of the Government of India, Ministry of Finance (Department of Revenue), No. 9/2025- Union Territory Tax (Rate), published in the Gazette of India, Extraordinary, Part II, Section 3, Sub- section (i), vide number G.S.R. 646(E), dated the 17th September, 2025, namely:-
In the said notification, -
in the Schedule II – 9%, after S. No. 4 and the entries relating thereto, the following serial number and entries shall be inserted, namely: -
“4A.
2403 19 21, 2403 19 29
Biris;”
in the Schedule III – 20%, after S. No. 13 and the entries relating thereto, the following serial numbers and entries shall be inserted, namely: -
“14.
2106 90 20
Pan masala;
15.
2401
Unmanufactured tobacco; tobacco refuse [other than tobacco leaves];
16.
2402
Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes;
17.
2403 (other than 2403 19 21, 2403 19 29)
Other manufactured tobacco and manufactured tobacco substitutes; homogenised or reconstituted tobacco; tobacco extracts and essences [other than biris];
18.
2404 11 00
Products containing tobacco or reconstituted tobacco and intended for inhalation without combustion;
19.
2404 19 00
Products containing tobacco or nicotine substitutes and intended for inhalation without combustion;”
the Schedule VII – 14%, and the entries relating thereto shall be omitted.
2. This notification shall come into force on the 1st day of February, 2026.
[F. No. CBIC-190349/73/2025-TRU] (Dheeraj Sharma) Under Secretary
Note: The principal notification No. 9/2025- Union Territory Tax (Rate), dated the 17th September, 2025, was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 646(E), dated the 17th September, 2025.
Q1: What is Notification No. 19/2025 – Union Territory Tax (Rate)?
Answer: It is a GST notification that revises UTGST rates on tobacco and related products by amending Notification No. 09/2025 – Union Territory Tax (Rate), effective from 1 February 2026 19-2025-UTR-Eng-corri.
Q2: From which date are the revised UTGST rates applicable?
Answer: The revised rates apply from 1st February 2026 for all supplies made on or after this date.
Q3: Which tobacco products attract 9% UTGST?
Answer: Only Biris (HSN 2403 19 21 & 2403 19 29) attract 9% UTGST under Schedule II.
Q4: Which products are taxed at 20% UTGST?
Answer: Pan masala, cigarettes, cigars, manufactured tobacco, unmanufactured tobacco, and nicotine inhalation products are taxed at 20% UTGST.
Q5: Why was the 14% UTGST slab removed?
Answer: The removal simplifies GST structure and ensures tobacco products are taxed at higher deterrent rates, reducing classification disputes.
Q6: Does this notification apply outside Union Territories?
Answer: No. This notification applies only to Union Territories. States follow corresponding CGST + SGST notifications.
Q7: How does Section 15(5) of CGST Act apply here?
Answer: Section 15(5) allows the Government to notify special valuation or rate treatment for specified goods like tobacco.
Q8: Will this affect importers operating in UTs?
Answer: Yes. Imports cleared for use in Union Territories will attract revised GST rates. Ensure accurate compliance with Finodha GST Compliance: https://finodha.in/gst-compliance/
Q9: What changes are required in GST returns?
Answer: Businesses must update tax rates in billing software and correctly report UTGST in GSTR-1 and GSTR-3B. 👉 Start filing with Finodha GST Return Filing: https://finodha.in/gst-return-filing/
Q10: Will old stock be taxed at old rates?
Answer: No. GST depends on time of supply, not purchase date. Supplies after 1 Feb 2026 attract new rates.
Q11: Are vape and nicotine products included?
Answer: Yes. Products under HSN 2404, including nicotine inhalation products, attract 20% UTGST.
Q12: Does this notification affect GST registration?
Answer: Higher tax impact increases compliance risk. Businesses near threshold should reassess registration needs. 👉 Register easily with Finodha GST Registration: https://finodha.in/online-gst-registration/
Q13: What are the consequences of charging wrong UTGST rates?
Answer: Incorrect rates may lead to: Tax demand under Section 73/74 Interest under Section 50 Penalties under GST law
Q14: Real-life example for better understanding?
Answer: 🧾 Example: A cigarette packet sold in Delhi UT after 1 Feb 2026 will attract 40% GST, significantly increasing retail price.
Q15: How can Finodha help businesses in Union Territories?
Notification No. 19/2025 – Union Territory Tax (Rate) is a major GST rate overhaul for tobacco products in UTs. With higher UTGST slabs and removal of 14% rate, businesses must update systems before 1 February 2026.
