RECENT DEVELOPMENTS IN GOODS AND SERVICES TAX

Finance Minister has reiterated in the Parliament during Budget debate that the amounts collected from cesses and surcharges were spent on schemes that benefited the states. Centre had transferred 41% to the States as per 15th Finance Commission recommendations. 16th Finance Commission Report has also confirmed that devolution made by the centre matches the recommendations. Further, States ought to distinguish between the gross tax revenue and the net proceeds which alone are legally shareable with the States. The first part of Budget session of the Parliament is over and second part shall recommence post Holi festival.

Reserve Bank of India has recently revised its GDP outlook from 7.3% to 7.4% for FY 2026 and from 6.7% to 6.9% for Q1 of FY 2027. Growth prospects are better and core inflation continues to be benign. Global Rating Agency, Moody’s has projected India’s GDP to grow at 6.4% in FY 2027, fastest growing G-20 economy driven by strong domestic consumption, policy measures and stable banking system.

According to RBI’s monthly bulletin, near term outlook for Indian economy looks favourable only and is well positioned to sustain its high growth momentum- driven by consumption, investment and productivity enhancing reforms. The FTAs between India - EU and US shall play a significant role in coming years because of improved market access, enhanced export competitiveness and integration of Indian firms into global value chains.

CBIC has issued a notification for appointment of Nodal Officer for GST Intelligence u/s 14A(3) of IGST Act, 2017 designating the Principal Additional Director General (DGGI-HQ), CBIC as Nodal Officer for this purpose. GSTN has enabled the new online facility for eligible taxpayers to apply for withdrawal from option availed under Rule 14A by filing Form GST REG-32 on the portal. Other advisories and updates are on GST procedural aspects such as enabling online option for filing of LUT for FY 2026-27, merging of ‘additional notice and orders’ tab with main ‘notices and orders’ tab and online application for unbarring of barred GST returns. This will provide mechanism to seek unblocking of barred returns. In yet another development, Ministry of Consumer Affairs, Food & Public Distribution has stated that mandatory levy of service charge by restaurants violates consumer law as affirmed by the Central Consumer Protection Authority (CCPA).

Benches of GSTAT have started functioning at various places. Online filing of appeals has already commenced. It is expected that once GSTAT is fully operationalised, appeals will start getting disposed off paving way for dispute resolution. Out of 1029 appeals filed so far, GSTAT has pronounced its fist order on 16.02.2026.

GST 2.0 reforms have resulted in higher consumption of goods, particularly FMCG goods and companies have witnessed growth in top-line and bottom-line. India being a consumption based economy, GST rate cuts have thus been a driving force in recent growth and at the same time hold promise for future.

It is leant that next GST Council meeting may discuss issues on registration, refunds, audits etc which is expected to be held after the budget session is over. E-way bill system is also likely to be revamped in due course. There has been no meeting since 2nd September, 2025.

Appointment of Nodal Officer u/s 14A (3) of IGST Act, 2017

• Ministry of Finance (Department of Revenue) has notified the appointment of Nodal Officer for GST Intelligence u/s 14A (3) of IGST Act, 2017.
• Central Government has designated the Principal Additional Director General /Additional Director General (Intelligence) of Directorate General of GST Intelligence Headquarters (DGGI-HQ), Central Board of Indirect Taxes and Customs, in Department of Revenue, Ministry of Finance, as the nodal officer for the purposes of the said rules in respect to section 14A(3) of Integrated Goods and Services Tax Act, 2017.
• The new Notification shall supersede earlier Notification No. 95(E) dated 06.01.2025.
• This is also in pursuance of Section 79(3)(b) of the Information Technology Act, 2000 read with Rule 3(1)(d) of the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, 2025.
• Section 14A of IGST Act 2017 deals with special provision for specified actionable claims supplied by a person located outside the taxable territory.
• This shall come into force w.e.f. 17.02.2026.

(Source: Notification No. S.O.858(E) dated 17.02.2026 issued by Ministry of Finance)

GSTN update – Application for Unbarring Returns enabled

• GSTN has operationalized the Application for Unbarring Returns recently on the GSTN portal and the same is available at the “Returns” section under Services at the GSTN portal with the name of “Application for Unbarring Returns”.
• As per the provision of Rule 59(6) of CGST Rules, 2017 read with Section 39 and 47 of CGST Act, 2017, where a registered person fails to furnish return for a continuous period of three years, the GST system bars any subsequent return filing and once the system level barring was triggered the relevant return period became non-editable and the taxpayer was technically prevented to file the pending returns.
• GSTN has now enabled the online application for the same where taxpayers may apply for unbarring under services >> Returns >> Application for Unbarring Returns.
• While filing such application the taxpayers are required to provide reasons for non-filing. Post filing, the application is routed to the Jurisdictional Assessing Officer (AO) and upon satisfaction, the AO may approve the unbarring.
• Once approved, the barred returns are made available for filing.

(Source: GSTN Portal dated 04.02.2026)

GSTN update – Additional Notices & Orders tab merged with Notices and Orders

• GSTN has merged the earlier separate tab for “Additional Notices and Orders” with the “Notices and Orders” section available under services section for easy access and facilitation for the users.
• GSTN has also introduced a dedicated “Notices and Orders” tab directly on the GSTN portal dashboard as well making it prominently visible to taxpayers upon logging into the GST portal, allowing easy access to all notices and orders issued by the tax authorities without the need to navigate through multiple menus.
• This usability enhancement is aimed at improving transparency and tax payer compliance and addresses the long standing concern raised by taxpayers and professional regarding missed notices due to fragmented display across different tabs.
• The decision for this change follows extensive litigation across multiple High Courts where taxpayers challenged the validity of notices being uploaded exclusively under the Additional Notices tab of the GST portal and several writ petitions were filed contending that such uploads, violated principles of natural justice due to lack of alerts or proper visibility.
• This welcome change is expected to reduce the complexity in the GSTN portal.

(Source: Changes at GSTN Portal)

GSTN update – Filing of LUT for FY 2026-27 enabled

• GSTN has enabled the filing of Letter of Undertaking (LUT) for the Financial Year 2026–27 on the GST Portal and eligible taxpayers who are required to furnish LUT for making zero-rated supplies without payment of IGST may submit the same in required Form GST RFD-11 for the upcoming financial year.
• The option to select the relevant financial year, including FY 2025–26 and 2026–27, is now visible in the LUT filing module under User Services on the portal.
• Taxpayers who had previously furnished LUT offline for earlier periods may also upload fresh form at the GSTN portal.
• GSTN has advised all eligible registered persons to complete the LUT filing for FY 2026–27 well in advance, to avoid any last-minute inconvenience.
• This facility ensures timely compliance for exporters and suppliers undertaking zero-rated supplies, thereby facilitating seamless continuation of export-related operations.

(Source: Updates at GSTN Portal)

Facility for Withdrawal from Rule 14A (GST Registration) - GSTN

• GSTN has enabled a new online facility for eligible taxpayers to apply for withdrawal from the option availed under Rule 14A of the CGST Rules by filing Form GST REG-32 on the GST Portal.
• Active taxpayers who are registered under Rule 14A, may apply for OPT OUT in accordance with the provisions of the law.
• As a pre-condition, the registered person shall not be allowed to file Form GST REG-32 unless he has furnished:

• returns for a period of minimum three months, if Form GST REG-32 is filed before 1st April, 2026;
• returns for a period of minimum one tax period, if Form GST REG-32 is filed on or after 1st April, 2026; and
• all the returns due for the period from the effective date of registration till the date of filing of Form GST REG-32.

• Based on data analysis, the taxpayer will have to undergo either OTP based Aadhaar authentication or Biometric based Aadhaar Authentication.
• Authentication shall be required for:

• Primary Authorised Signatory (mandatory), and
• At least one Promoter/Partner (where applicable).

ARN will be generated only after successful Aadhaar authentication.

• While Form GST REG-32 is pending after submission, taxpayer cannot file Core amendment, non-core amendment and Self-cancellation application.
• Post-sanction of Opt-Out, the taxpayer who has received an order in Form GST REG-33 allowing withdrawal shall be able to furnish the details of output tax liability on supply of goods or services or both made to registered persons, exceeding the output tax liability of Rs. 2.5 lakhs, from the first day of succeeding month in which the said order has been issued.
• Following timelines shall be adhered to :

• Draft application must be submitted within 15 days of creation.
• Aadhaar/Biometric authentication must be completed within 15 days from submission.
• If authentication is not completed within the prescribed time, ARN will not be generated.

• For application,

• After login, navigate to: Services - > Registration - > Application for Withdrawal from Rule 14A. The link will be visible only if the taxpayer is registered under Rule 14A and is active.
• The field “Option for registration under Rule 14A” will be selected as “No” by default.
• Enter “Reason for withdrawal from Rule 14A”.
• Proceed to Aadhaar Authentication tab for Aadhaar Authentication of Primary Authorised Signatory and one Promoter/Partner.

(Source: GSTN Advisory dated 21.02.2026)

GSTN Update: Separate IMS tab to display rejected credit notes

• GST portal has rolled out a new enhancement in the Invoice Management System (IMS) to simplifying the process of identifying cases where tax liability must be added back in GSTR-3B, including by way of rejection of credit notes issued by tax payers.
• A separate tab has been introduced in the Outward IMS section to specifically display Rejected Credit Notes and related entries where corresponding liability is required to be reversed or added back in the monthly return.
• Currently the taxpayers and professionals had to manually scrutinize all IMS entries and detect such cases, making the reconciliation process time-consuming and prone to oversight, which often resulted in additional effort during return filing and reconciliation.
• The introduction of this dedicated tab is a welcome step which eases GSTR-3B compliance as the system automatically categorizes and displays relevant rejected credit notes, allowing taxpayers to easily track instances where output tax liability needs to be adjusted in GSTR-3B.

(Source GSTN Portal)

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