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Notification No. 20/2025 – Central Tax Explained

by Shakshi Bharti | Dec 31, 2025 | GST, Notifications | 0 comments

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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.

[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 31^st 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 1^st 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 31^st October, 2025, vide number G.S.R. 805(E), dated the 31^st October, 2025.

Dr Puneeta Bedi Director

📚 Frequently Asked Questions (FAQs): Notification No. 20/2025 – Central Tax

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.
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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
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✅ 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.