Notification No. 01/2026 – Union Territory Tax (Rate) Explained

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Notification No. 01/2026 - Union Territory Tax (Rate): Seeks to amend Notification No 9/2025 - Union Territory tax (Rate) to align them (as updated vide Corrigendum dated 06.05.2026)

[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 (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 further 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, Subsection (i), vide number G.S.R. 646(E), dated the 17^th September, 2025, namely —

In the said notification, -

in Schedule I – 2.5 %,

against S. No. 150, for the entry in column (2), the entry “2202 99 21, 2202 99 29” shall be substituted;

against S. No. 151, for the entry in column (2), the entry “22029931, 22029939” shall be substituted;

In Schedule III - 20%,

against S. No. 2, for the entry in column (2), the entry “2202 91 00, 2202 99 91, 2202 99 99” shall be substituted;

against S. No. 3, for the entry in column (2), the entry “2202 99 91, 2202 99 99” shall be substituted;

2. This notification shall come into force from 1^st May, 2026.

[F. No. 190341/139/2026-TRU]
(Dheeraj Sharma)
Under Secretary

Note: The principal notification No. 09/2025-Union Territory Tax (Rate), dated the 17^th September, 2025 was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-Section (i) vide G.S.R. 646(E), dated the 17^th September, 2025 and was last amended vide Notification No. 19/2025- Union Territory Tax (Rate) dated the 31^st December, 2025 vide G.S.R. 948(E), dated the 31^st December, 2025.

📚 Frequently Asked Questions (FAQs): Notification No. 01/2026 – Union Territory Tax (Rate)

Q1: What is Notification No. 01/2026 – Union Territory Tax (Rate)?

Answer: It is a UTGST notification amending tariff classifications under Notification No. 9/2025.
The notification updates HSN references to maintain alignment with revised tariff structures and corrigendum changes.

Q2: What is the main purpose of this notification?

Answer: The main purpose is classification alignment.
The Government revised tariff entries so that UTGST schedules remain consistent with updated GST and customs tariff structures.

Q3: Does this notification change UTGST rates?

Answer: Mainly, it revises tariff references instead of broad rate changes.
However, classification changes can still impact GST treatment and reporting accuracy.

Q4: Which businesses are most affected?

Answer: Businesses operating in Union Territories are mainly affected.
This is especially relevant for businesses dealing in products under tariff heading 2202.

Q5: When does the notification become effective?

Answer: The notification becomes effective from 1 May 2026.
Businesses should update systems before processing transactions after this date.

Q6: Why are HSN codes important in GST?

Answer: HSN codes determine proper tax classification and reporting.
Incorrect HSN usage can create audit notices, reconciliation mismatches, and compliance disputes.

Q7: Will this affect e-invoicing?

Answer: Yes, indirectly.
Incorrect HSN mapping in ERP systems can create invoice reporting inconsistencies and validation issues.

Q8: Is this linked with corrigendum updates?

Answer: Yes, the notification aligns UTGST schedules with updated corrigendum-based changes.
The objective is consistency in tariff references across GST frameworks.

Q9: Can wrong classification lead to penalties?

Answer: Yes, in some situations.
Authorities may impose interest or penalties if incorrect classification impacts tax treatment or reporting.

Q10: Is the notification applicable across all Union Territories?

Answer: Yes, it applies under the UTGST framework.
Businesses operating in Union Territories should comply with the revised tariff references.

Q11: Do businesses need to revise old invoices?

Answer: Generally, the amendment applies prospectively from 1 May 2026.
However, businesses should carefully review transition-period transactions.

Q12: How can businesses avoid classification disputes?

Answer: Proper HSN review and regular compliance checks help significantly.
Businesses should periodically review tariff amendments and update ERP mapping.

Q13: Why are classification notices increasing?

Answer: GST compliance systems are becoming more data-driven.
Authorities now compare invoice data, e-invoices, returns, and HSN reporting automatically.

Q14: Is professional GST review useful for such changes?

Answer: Yes, especially for product-heavy businesses.
Professional review helps reduce hidden classification and reporting risks.

Q15: Where can businesses get GST compliance support?

Answer: Businesses can seek expert assistance for GST reporting and classification compliance.
Services like GST Registration and GST Compliance are often useful for maintaining proper GST compliance records.

Conclusion

Notification No. 01/2026 – Union Territory Tax (Rate) may look technical, but practically it has important compliance implications for businesses operating under the UTGST framework.

In simple terms, the Government is ensuring that UTGST schedules remain aligned with updated tariff structures and corrigendum changes.

Businesses should not ignore these amendments because even small HSN mismatches can later create audit exposure, invoice inconsistencies, and reporting disputes.