RECENT DEVELOPMENTS IN GOODS AND SERVICES TAX

World Bank has raised India’s economic growth forecast for FY 2026 to 6.5% with China being at 4.4%, US at 2.2% and world at 2.6%. It has also upgraded forecast of India for FY 2027 to 6.6%. It says that India is expected to maintain the fastest growth rate among the world’s largest economies, as per its latest ‘Global Economic Projects’ report. Also, International Monetary Fund (IMF) has improved India’s FY 2026 outlook to 7.3%, up from 6.6% projected earlier. Accordingly, it is likely to remain fastest growing economy in FY 2026 and FY 2027.  However, global risks persist.

The next Union Budget is likely to be presented on Sunday, 1st February, 2026. While major changes may not be expected on taxation front, it is expected this Budget should aim at simplification, ease of doing business and long term reforms and policies. It should aim for stability, amid global tensions and US tariff war. It should be inclusive and enhance competitiveness as well as performance. Our macroeconomic indicators are robust but fiscal deficit should be further brought down. Setting up and boosting infrastructure further, India should continue to focus on basic infrastructure and quality of living with job creation and enhanced productivity. CBIC has confirmed that there are no GST or Indirect Taxes related proposals to be put up in the forthcoming budget session.

Though no major changes are expected, the FM should use this opportunity to further simplify rules and procedures and do something to improve upon interpretational issues for better and effective compliances. Simple law leads to lesser disputes and differences.

The forthcoming budget may assume nominal gross domestic product (GDP) growth between 10-10.5% in FY 2026-27. Nominal GDP is calculated at current market price which factors in the inflation effect. Nominal GDP growth is projected to be in the rage of 9.5-10.5% according to different agencies.

The Supreme Court shall be examining the powers of Enforcement Directorate (ED) to determine whether ED is a juristic entity to file a plea before high court under Article 226 of Constitution of India for enforcing its powers / rights. The Apex Court has issued notice to ED on SLPs filed by two state Governments Tamil Nadu and Kerala.

Delhi High Court in one of the orders recently took note of GSTAT working and asked the respondents (Government) to file an affidavit on the status of working of GSTAT benches [WP(C) 2026 & CM Appl 423/2026].

CBIC confirms no new Bills for GST or Indirect Tax for Budget Session 2026

• CBIC has informed the Ministry of Parliamentary Affairs that it has no legislative or non-legislative business to place before the Parliament during the forthcoming Budget Session 2026 scheduled on1st February, 2026.

• CBIC made this declaration through an Office Memorandum issued by GST Policy Wing of the CBIC, which was made in response to a request from the Ministry of Parliamentary Affairs seeking details of Bills and other items of Government business likely to be taken up during the upcoming budget session of Parliament.

[Source: CBIC Office Memorandum F.No. CBIC – 20016/1/2026-GST/ 1390

dated 15.01.2026 issued by MoF, GST Policy Wing]

Lenient Scrutiny of Appeals filed before GSTAT

• GSTAT has allowed lenient scrutiny of appeals for 6 months amid portal rollout challenges
• The Principal Bench of the GSTAT, Delhi has issued an Order directing all its benches across the country to adopt a lenient approach while scrutinizing appeal documents during the initial phase of 6 months of portal usage.
• The Order invokes powers under Rule 123 of the Goods and Services Tax Appellate Tribunal (Procedure) Rules, 2025, and acknowledges the practical difficulties being faced by appellants while filing appeals on the GSTAT portal in its early stage. Accordingly, the Order states as follows:

“The Registry of each bench shall keep a lenient view during scrutiny of the appeal documents and raise defect of substance only rather than for defect of form i.e. the defects not affecting the merit of the case shall not be raised, for an initial period of 06 months from the date of issuance of this order”.

• Benches shall raise objections only for defects of substance, and not for defects of form.
• It is also clarified that the documents generated digitally through GSTN System are not required to be certified, whereas, scanned copies of the physical documents attached with the appeal shall be signed.
• This order is issued by the Registrar, GSTAT with the approval of President, GSTAT.

(Source: Office Order No. F. No.GSTAT/Pr. Bench/Portal/125/25-26/2711-15 dated 20.01.2026 issued by GST Appellate Tribunal, Ministry of Finance)

Machine based levy of Duty on specified goods

CBIC has issued  Frequently Asked Questions (FAQs) on Machine-Based levy in case of  chewing Tobacco, Jarda Scented Tobacco and Gutkha notified vide Notification No. 03/2025-Central Excise and notification No. 04/2025-Central Excise both dated 31.12.2025. These duty rates will come into effect from 1 February, 2026. Accordingly,

• The Chewing Tobacco, Jarda Scented Tobacco and Gutkha Packing Machines (Capacity Determination and Collection of Duty) Rules, 2026 have been notified vide Notification No. 05/2025-Central Excise (N.T.) dated 31.12.2025. These Rules will come into effect from 1 February, 2026.
• These rules cover the goods notified under Section 3A of the Central Excise Act, 1944 vide Notification No. 04/2025- Central Excise (N.T.) dated 31.12.2025 namely, chewing tobacco (including filter khaini), jarda scented tobacco and gutkha.
• These rules provide for manner of capacity determination and collection of Central Excise duty on the notified goods viz. chewing tobacco (including filter khaini), jarda scented tobacco and gutkha.
• These rules are applicable to manufacturers of pouches of the notified goods. Those manufacturing in other forms (such as tins) have to pay the applicable duty on assessable value.
• The declaration in Form CE DEC-01 has to be filed on the portal within seven days of coming into effect of the Rules i.e. by 7 February, 2026.
• The parameters required to be declared include number of machines, specifications regarding the machines such as maximum rated capacity and gear box ratios and the details of retail sale prices as mentioned.
• Duty is based on deemed quantity produced by maximum rated capacity of the machine.
• As per Section 3A of the Central Excise Act, 1944 the manufacturer is required to pay the duty based on the determined annual capacity of production. However, pending verification of the declaration filed, the manufacturer shall pay the duty based on the retail sale prices of the pouches manufactured during the month and the maximum rated speed, in pouches per minute, of the packing machine.
• The jurisdictional Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, will determine the annual capacity of production after conducting physical inspection of the factory and verification of technical specifications of the machines. The annual capacity of production shall be determined by multiplying the quantity of notified goods deemed to be produced in a month with 12 (months) in accordance with Rule 5 of the said Rules.
• The jurisdictional Deputy Commissioner or Assistant Commissioner of Central Excise, as the case may be, shall issue an order within thirty days of verification after giving the manufacturer a reasonable opportunity of being heard. The differential duty, along with applicable interest, is payable from the date of installation of the machine or the date of change in factors relevant to production, as the case may be, till the date of actual payment. For the existing manufacturers, in the case of first determination, the differential duty and interest have to be paid from 1 February 2026.
• As per the Rule 13(3), the manufacturer has to pay the duty fully for the entire month in which the machines have been installed.
• The manufacturer is required to submit a monthly form in FORM CE STR-1 on or before the 10 day of the same month. This is apart from the monthly return which he is required to file as per Rule 12 of the Central Excise Rules.
• Abatement is calculated on a pro-rata basis using the following formula –

Abatement = (Monthly duty liability × Number of days of non-operation) ÷ Total number of days in the month.

• The manufacturer has to intimate the jurisdictional Deputy Commissioner or Assistant Commissioner of Central Excise, as the case may be, at least 3 working days before the non-operation of an installed machine for any continuous period of fifteen days or more.
• The jurisdictional Deputy Commissioner or Assistant Commissioner of Central Excise, as the case may be, must be intimated at least 3 working days before the date from which the operations are intended to be resumed. The machines will be de-sealed in the presence of the jurisdictional Superintendent of Central Excise.
• Every manufacturer operating packing machine is required to install a functional CCTV system covering all packing machine areas and to preserve the footage for a minimum period of twenty-four months.
• The manufacturer has to file an intimation for surrender of registration. The duty shall be adjusted or refunded in the manner prescribed in Rule 21 of the said Rules.
• Export of notified goods without payment of duty is not permitted under the capacity-based levy scheme.

(Source: PIB Release dated 01.01.2026 issued by Ministry of Finance)