Key GST Updates and Advisories for January 2026

During January 2026, multiple advisories and orders were issued on the GST common portal to streamline compliance and address transitional challenges faced by taxpayers. Key updates include the introduction of a machine-based duty levy on specified tobacco products such as chewing tobacco, jarda scented tobacco, and gutkha, effective from 1 February 2026, with detailed rules on capacity determination, declarations, monthly reporting, abatement, and compliance controls like CCTV installation. Further, GSTN enabled electronic opt-in and opt-out declarations for classification of specified premises, prescribing strict timelines for existing and new registrants. Recognising initial portal-related difficulties, the Goods and Services Tax Appellate Tribunal directed all benches to adopt a lenient scrutiny approach for six months, limiting objections to defects of substance only. Additionally, GSTN issued guidance on RSP-based valuation for notified tobacco goods, clarifying correct reporting of taxable value in e-invoicing, e-Way Bills, and GST returns. Collectively, these measures aim to ensure smoother implementation, reduce procedural hardship, and reinforce statutory compliance without diluting legal requirements.

The gist of these Advisories is summarized hereunder for easy understanding:

 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. 3/2019-Central Excise and Notification No. 04/2025- Central Excise (N.T.) 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, 2025 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)

 Advisory on Filing Opt-In Declaration for Specified Premises, 2025

• Registered persons must file a declaration issued vide  Notification 05/2025 – CT (Rate) Dated 16-01-2025 which is now made available electronically on the GSTN Portal to classify premises as specified premises.
• Annexures VII, VIII, and IX are introduced for opt-in and opt-out declarations for such premises.
• Annexure VII is for opt-in declaration for registered person
• Annexure VIII is for opt-in declaration for person applying for registration
• Annexure IX is for opt-out declaration
• The above declarations shall be filed on or after 1st of January of the preceding Financial Year but not later than 31st of March of the preceding Financial Year. (for already registered persons).
• For Financial Year 2026-27, Annexure VII can be filed from 1^st January, 2026 to 31^st March, 2026.
• The above declaration shall be filed within fifteen days of obtaining acknowledgement for the registration application (for new taxpayers).

 (Source: GSTN Advisory dated 04.01.2026)

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) 

Advisory on RSP-Based Valuation of Notified Tobacco Goods under GST

• An advisory on reporting of taxable value and tax liability under RSP-based valuation in e-Invoice, e-Way Bill and GSTR-1 / GSTR-1A / IFF has been issued for the information and guidance of taxpayers.
• Taxpayers shall ensure that the taxable value is computed strictly in accordance with the notified RSP-based valuation formula, and that tax is discharged on such taxable value. For the purposes of reporting in the e-Invoice e-Way Bill systems and GSTR-1/1A/IFF, the Net Sale Value (commercial consideration) shall be reported in the taxable value field. The total invoice value shall be reported as the sum of the net sale value and the tax amount.
• Due care shall be exercised to correctly identify and classify notified goods, and to apply RSP-based valuation only in cases where the same is statutorily applicable.
• This reporting mechanism is only devised as a trade facilitation measure, without any dilution of the statutory provisions or legal requirements prescribed under the GST law.

(Source: GSTN Advisory dated 23.01.2026)