GST Service Rate and Exemption Reforms: EVs, Helicopters, R&D and Highways

Summary: The 57th GST Council meeting held on 8 October 2026 recommended changes concerning service-rate, exemption and clarification recommendations, ipr classification and related clarification. The Ministry of Finance press release records recommendations and, in some cases, proposals for future circulars, consultation or in-principle approval. It is not itself an amending Act, rule or rate notification. This analysis explains the precise measures described in the release, their relationship with the statutory provisions identified there, and the practical questions that remain unresolved until the implementing instruments are published. Taxpayers should continue to apply the law currently in force and should not change return positions, claim additional credits, discontinue documentation or alter rates merely on the basis of the Council announcement.

Background and legal status

The Council’s 57th meeting concentrated on process reform following earlier rate rationalisation. The press release distinguishes existing portal measures from new statutory or procedural proposals. Council recommendations require the appropriate amendment, notification, rule, circular or portal implementation, as applicable. A suggested implementation date in the release is not proof of commencement.

Service-rate, exemption and clarification recommendations

Recommendations relating to services Passenger transport and rental of motor vehicles using Electric Vehicles To provide an option to pay GST at the rate of 5%, with restricted input tax credit, on passenger transport services and rental services of motor vehicles with operators, where the service is supplied using an electric vehicle, and the cost of battery charging is included in the consideration. Transportation and delivery services supplied through Electronic Commerce

Operators To bring delivery services, other than courier and postal, supplied through an ECO under Section 9 (5) of CGST Act, 2017, where the person supplying such services is not liable for registration under Section 22 (1) of the CGST Act, 2017 and to prescribe GST rate of 5% without ITC for such delivery services; To prescribe a GST rate of 5% without ITC for delivery services in relation to goods where such goods are supplied/ordered through an ECO;

To exclude the GST exemption on the services of transportation of goods to unregistered persons by GTA under Entry 21A of Notification No. 12/2017-Central Tax (Rate), where such services are in relation to goods which are supplied/ordered through an ECO. Motor vehicle leasing transactions To clarify the GST treatment of certain statutory and ancillary recoveries such as registration charges, road tax, insurance and FASTag charges incurred by the lessor which are subsequently recovered from the lessee in connection with the leasing of motor vehicles.

Input Tax Credit in the same line of business To allow limited input tax credit in the same line of business, for the supply of restaurant/outdoor catering services, hotel accommodation services for value up to Rs. 7500 per unit per day, and gym/fitness services in the same manner as is currently available for passenger transportation services, tour operator services and renting of motor vehicles services. Transport of passengers by Helicopters from/to specified states

Press-release recommendation. To exempt from GST, the services of passenger transportation by helicopter on seat-sharing basis from/to airports/helipads located in north-eastern states, Sikkim and Bagdogra in West Bengal. Storage or warehousing of seeds meant for sowing: To exempt from GST, the services by way of storage or warehousing of seeds meant for sowing. Curing of coffee To exempt from GST, the agricultural support services of curing coffee provided by the coffee curers to the cultivators.

Taxability of the services of Seamen’s Provident Fund Organisation To exempt from GST, the services provided by Seamen’s Provident Fund Organisation (SPFO) to persons governed by the Seamen’s Provident Fund Act, 1966 . Research & Development Services To provide for a simple mechanism of self-certification by the head of institution/organization undertaking research and development services, certifying that the activity is in the nature of research and development and not consultancy, for the purpose of determining eligibility for exemption under Entry 44A of Notification 12/2017 – Central Tax (Rate).

Import of services by Indian establishments of foreign shipping lines To exempt the import of services by an establishment of a foreign shipping company in India from a related person or any of its establishment outside India, when made without consideration; To regularize the past period on “as is where is” basis. Upfront/concession amount paid to NHAI under Toll Operate Transfer Model for highway projects To exempt from GST, the services of the grant of exclusive right, license and authority by the Government including local Authority, governmental authority and government entity to the concessionaire for highway projects to demand, collect and appropriate toll fee.

Operation and Maintenance services for highway projects under TOT model To provide a special procedure regarding the valuation and time of payment of GST on Operation and Maintenance (O&M) services provided by concessionaires to the concessioning authority for highway projects in TOT model. Fund Transfer Pricing mechanism in banks To clarify that the notional amount regarded as “interest” in the books of accounts for the activity of notional transfer of funds between the branches of the banks by the head office as part of Funds Transfer Pricing transactions is covered by the definition of

“interest” , given in Notification No. 12/2017-Central Tax (Rate). Note: The recommendations of the GST Council have been presented in this release containing major item of decisions in simple language for information of the stakeholders. The same would be given effect through the relevant circulars/ notifications/ law amendments which alone

Legal reading and implementation questions

The recommendation must be tested against the final statutory or delegated instrument: the operative wording, class of eligible persons or supplies, procedural conditions, effective date, and treatment of past periods. Until those elements are notified, this section describes a proposal rather than a presently enforceable entitlement or restriction.

IPR classification and related clarification

Treatment of transfer of title in Intellectual Property Rights (IPR): The Council recommended amendment in Schedule-II of CGST Act, 2017 to provide that transfer of title in IPRs, whether temporary or permanent, will be uniformly treated as supply of services. This will ease GST compliances and will facilitate smoother cross border transactions involving IPR. Amendment in rule 86A of the CGST Rules, 2017 to provide for opportunity of being heard to the taxpayer

: The GST Council recommended amendment in rule 86A of the CGST Rules, 2017 to provide a mechanism for enabling a taxpayer to file an objection against blocking of any amount in electronic credit ledger and to avail a personal hearing before the proper officer takes a decision on such objection.

Legal reading and implementation questions

The recommendation must be tested against the final statutory or delegated instrument: the operative wording, class of eligible persons or supplies, procedural conditions, effective date, and treatment of past periods. Until those elements are notified, this section describes a proposal rather than a presently enforceable entitlement or restriction.

Analysis

The release sets out targeted exemptions, rate options and clarifications rather than a general exemption for entire sectors. For example, a proposed rate option with restricted ITC is different from a full input-credit rate; helicopter transport relief is geographically and operationally described; and R&D self-certification is tied to distinguishing research from consultancy. The legal effect of each recommendation depends on the final notification or amendment.

Way forward

First, identify the relevant Act amendment, rule amendment, rate notification or circular when issued. Second, compare its wording with the Council announcement; the final text may narrow, qualify or stage the measure. Third, confirm the commencement clause and any retrospective or transitional provision. Fourth, update compliance procedures only after checking whether portal changes, prescribed forms and administrative instructions are available.

Key takeaways

• The 8 October 2026 press release is the primary source for the proposals discussed here.
• A recommendation, in-principle approval or proposed circular does not itself change the operative law.
• Where the release identifies thresholds, dates or exceptions, the final legal text must be checked before applying them.
• Existing statutory filing, payment, record-keeping and appeal obligations continue until lawfully changed.

Frequently Asked Questions

Have these Council recommendations come into force?

Not merely by publication of the press release. The applicable amendments, notifications, rules or circulars and their commencement provisions must be examined.

Can a taxpayer rely on the proposed relief in a current return or proceeding?

Only if the relevant legal instrument is effective and the taxpayer satisfies its conditions. The announcement alone is insufficient.

Will every measure commence on the same date?

The release refers to different proposed implementation arrangements. Each measure must be checked separately against its eventual legal instrument.

Does the release settle all procedural and documentary conditions?

No. Several recommendations expressly contemplate further rule changes, circulars, portal modifications or consultation.

What should advisers do before acting on the announcement?

Maintain the current-law position, identify the specific recommendation, and track the final text, commencement and any transitional provision.

TaxGuru source and related reading

Principal press release: 57th GST Council Meeting – TaxGuru

Provision-by-provision legal verification and qualifications

EV and helicopter passenger transport

The 5% EV passenger transport and vehicle-with-operator rental option carries restricted ITC and requires battery charging in the consideration. Helicopter seat-sharing exemption is limited to travel from/to airports/helipads in north-eastern States, Sikkim and Bagdogra.

Motor-vehicle leasing recoveries

The release proposes a clarification for registration fees, road tax, insurance and FASTag charges recovered by the lessor. It does not announce a general exemption for all recoveries.

Limited same-line-of-business ITC

The Council proposes limited same-line-of-business credit for restaurants/outdoor catering, hotel accommodation up to ₹7,500 per unit per day and gym/fitness services. It is not full ITC for all expenses.

Other service exemptions

Separate recommendations cover storage of seeds for sowing, coffee curing services to cultivators, and services of the Seamen’s Provident Fund Organisation to persons governed by its Act. Each has its own class-specific conditions.

R&D and shipping

R&D self-certification is to distinguish research from consultancy under Entry 44A; imports without consideration by Indian establishments of foreign shipping companies from related foreign entities are proposed for exemption, with past regularisation.

Highway concessions and bank FTP

The release proposes exemption for the grant of toll collection rights in highway concessions, a special GST valuation/time-of-payment procedure for TOT O&M services, and clarification of notional interest under bank funds-transfer pricing. These should not be collapsed into one exemption.

IPR classification

Transfer of title in intellectual property, temporary or permanent, is proposed to be uniformly treated as supply of services through Schedule II amendment.

Verified TaxGuru internal references

Primary source: 57th GST Council recommendations as published on TaxGuru

Related analysis: E-commerce operator liability under section 9(5)

Related analysis: Specific GST provisions applicable to e-commerce operators

Related analysis: Section 17(5) blocked-credit guide

Related judgment: Rule 86A and pre-decisional hearing case

Related judgment: Electronic credit ledger blocking without hearing and reasons

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Disclaimer: This article is an editorial explanation of the recommendations recorded in the Ministry of Finance press release dated 8 October 2026. It is not a statement that any proposed amendment has commenced. Readers must verify the relevant enacted law, notifications, rules, circulars and judicial developments before acting. TaxGuru accepts no responsibility for decisions taken solely on the basis of this article.