GST

GST on Electricity in India Complete Guide 2026

GST on Electricity in India Complete Guide 2026 | Exemptions, Rates & Business Impact GST on Electricity in India 2026: The Complete Guide Electricity is the lifeline of modern India — from powering homes and hospitals to fuelling industries and electric vehicles. Yet, when it comes to the Goods and Services Tax (GST) framework, electricity has always occupied a unique and often misunderstood position. Is electricity exempt from GST? Who bears the tax burden? What about solar energy and EV charging stations? This comprehensive guide — updated for 2026 — cuts through the confusion and provides every individual, business owner, accountant, and policy enthusiast with a crystal-clear understanding of how GST applies (or doesn’t apply) to electricity in India. From the legal framework to real-world business impact, we cover everything you need to know. 1. What Is GST and Why Does Electricity Need Special Treatment? Introduced on 1st July 2017, the Goods and Services Tax (GST) is India’s most significant tax reform — a unified, destination-based indirect tax that subsumed over 17 central and state taxes. GST operates on a dual structure: Central GST (CGST) and State GST (SGST) for intra-state transactions, and Integrated GST (IGST) for inter-state transactions. Electricity, however, is not an ordinary commodity. It is simultaneously a utility, a social necessity, and an industrial input. Taxing it under GST without careful design would create cascading cost pressures on every sector of the economy. This is precisely why the GST Council chose to keep the direct supply of electricity outside the standard GST framework — at least for now. Why Electricity Is Strategically Kept Outside GST Electricity is consumed by all citizens — rich and poor alike. Taxing it would disproportionately affect lower-income households. The electricity sector is already subject to state-level electricity duties and cess under the Electricity Act, 2003. India’s manufacturing and industrial competitiveness would be impacted if electricity costs rose due to GST without available Input Tax Credit (ITC). Bringing electricity under GST would require amendment to the Constitution (Article 246 and Schedule VII), which has not been undertaken yet. 2. Is GST Applicable on Electricity? Legal Framework The short and definitive answer is: The direct supply (sale) of electrical energy is EXEMPT from GST under the current Indian tax law as of 2026. This exemption is grounded in multiple statutory provisions. Legal Basis for Exemption Entry No. 104 of the GST Exemption Notification (No. 2/2017-Central Tax Rate): Electrical energy is specified as exempt from GST. Schedule II of the CGST Act, 2017: Electricity is classified as goods, but the notification ensures it remains outside the tax net. Section 11 of the CGST Act, 2017: Empowers the government to exempt specific goods or services from GST by notification. Electricity Act, 2003: State governments levy Electricity Duty and State Electricity Tax, which continue alongside the GST framework. It is critical to note that this exemption applies specifically to the supply of electricity as a commodity (i.e., electrical energy sold by utilities to end consumers). Ancillary services and equipment related to electricity are treated differently. 3. GST Rate Table: Electricity, Equipment & Related Services 2026 The following table provides a comprehensive, up-to-date overview of GST rates applicable across the electricity value chain in India as of 2026: Category / Service GST Rate (2026) Remarks Supply of Electricity (Direct) EXEMPT Exempt under Schedule II of CGST Act Transmission of Electricity EXEMPT Services by Transmission/Distribution utilities exempt Distribution of Electricity EXEMPT Notified utilities exempt from GST Consultancy for Power Projects 18% Standard GST rate on professional services Installation of Solar Panels 12% Composite supply; panels attract 12% Solar Energy Devices & Parts 12% Reduced from 5% effective Oct 2023 Electrical Transformers & Switchgear 18% Capital goods for power infrastructure Captive Power Generation Equipment 18% DG sets, turbines, generators Electricity Meters 18% Smart & conventional meters EV Charging Station Services 18% AAAR ruling: supply of electricity via EV charger is service Rental of Genset / DG Set 18% Treated as service, not goods supply Note: Rates are as per the latest GST Council notifications and CBIC circulars as of early 2026. Always verify with a qualified CA or tax professional for transaction-specific advice. 4. Detailed Analysis: What Is Exempt and What Is Taxable? A. Transmission and Distribution: Fully Exempt The transmission of electricity through high-voltage lines by entities such as Power Grid Corporation of India Ltd. (PGCIL) and state transmission utilities is fully exempt from GST. Similarly, distribution of electricity by licensed distribution companies (DISCOMs) to residential, commercial, and industrial consumers is exempt. This ensures that the electricity cost for end consumers does not include any GST component. B. Services Incidental to Electricity Supply: Exempt The GST exemption for electricity supply extends to services that are naturally bundled with electricity distribution. This includes services like metre reading, billing, and basic repair of electrical connections provided by DISCOMs as part of their regulated utility function. These are treated as naturally bundled composite supplies and are exempt from GST. C. Captive Power Plants: A Complex Area Many large industries — particularly in steel, cement, and textiles — operate Captive Power Plants (CPPs) to meet their own electricity needs. The GST treatment of captive power is nuanced: Electricity generated and consumed within the same business entity is NOT considered a ‘supply’ under GST and therefore attracts no GST. However, capital equipment (turbines, generators, DG sets) used to set up and operate a CPP attracts 18% GST. Input Tax Credit (ITC) on equipment purchases for CPPs is NOT available for most manufacturers, since the output (electricity) is exempt. This ITC blockage under Section 17(2) of the CGST Act significantly increases the effective capital cost for industries setting up captive generation. D. EV Charging Stations: An Emerging GST Debate With India’s rapid push toward electric mobility under FAME II and the National Electric Vehicle Policy 2024, EV charging has become a significant GST question. The Authority for Advance Ruling (AAR) and Appellate Authority for Advance Ruling (AAAR) have consistently ruled that: Charging of electric

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GST on Goods Transport

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GST on Goods Transport by Road – GTA GST on Goods Transport by Road – GTA: The Ultimate 2026 Guide for Businesses, Transporters & Compliance Teams India’s logistics and road-transport sector is the circulatory system of its Rs. 300-lakh-crore economy. Every consignment that leaves a factory, warehouse, or port and travels to its destination on a truck or lorry passes through a complex web of taxes, compliance obligations, and regulatory rules. At the heart of this lies the Goods and Services Tax (GST) framework as it applies to Goods Transport Agencies (GTAs) — one of the most nuanced and frequently misunderstood chapters of Indian indirect tax law. As of 2026, the GST rules governing GTAs have been significantly clarified through a series of notifications, circulars, and GST Council decisions — yet confusion persists among consignors, consignees, transporters, and business owners alike. This comprehensive blog post, produced by our full marketing team (content, SEO, social, AI prompt, and design), covers every angle of GST on Goods Transport by Road in India: what a GTA is, the applicable GST rates, the Reverse Charge Mechanism (RCM), exemptions, Input Tax Credit (ITC) eligibility, e-way bill rules, compliance checklist, and the road ahead. What Is a Goods Transport Agency (GTA)? Under GST law, the term ‘Goods Transport Agency’ carries a precise statutory meaning. It is not synonymous with every business that transports goods — the definition is specific and has significant compliance implications. Statutory Definition of GTA under GST As per Notification No. 11/2017-Central Tax (Rate) dated 28th June 2017 (as amended), a Goods Transport Agency means any person who provides service in relation to the transport of goods by road and issues a consignment note (also called a lorry receipt or LR), by whatever name called. Key Insight The issuance of a consignment note is the defining element. If a transporter does not issue a consignment note, they are NOT classified as a GTA under GST, and different tax rules apply to their services. Who Is NOT Treated as a GTA? A person who owns goods vehicles but does not issue consignment notes — classified as a simple ‘transporter.’ An individual hiring a truck on an ‘own-account’ basis for personal or business use without issuing LRs. Courier companies that issue their own delivery documents — treated as courier services (different GST treatment). Airlines and railways — governed by their own provisions under the GST framework. Difference Between GTA, Transporter, and Courier Parameter Goods Transport Agency (GTA) Simple Transporter Courier Service Consignment Note Issued Yes (Mandatory) No Courier Receipt GST Applicability 5% or 12% (specific rules) 18% (general) 18% RCM Applicable Yes (in many cases) No No ITC Eligibility Conditional Standard Standard Registration Required If turnover > Rs. 20 Lakh Standard threshold Standard threshold GST Rate Structure on GTA Services in 2026 One of the most frequently asked questions is: What is the GST rate on GTA services? The answer is not a single number — it depends on whether the GTA opts to pay GST itself (forward charge) or the recipient pays under the Reverse Charge Mechanism, and whether the GTA claims ITC. Option 1: GTA Pays GST Under Forward Charge – 12% with ITC A GTA can voluntarily choose to pay GST under the forward charge mechanism. In this case: GST Rate: 12% (6% CGST + 6% SGST/UTGST, or 12% IGST for interstate transport). ITC Benefit: The GTA can claim Input Tax Credit on inputs (fuel, tyres, vehicle maintenance, etc.). This option must be declared at the beginning of the financial year and applies for the entire year. A declaration in a specified format must be submitted — updated GST Council clarifications (effective 18th July 2022 onwards, continued in 2026) require filing of Form Annexure V before 15th March of the preceding financial year. Option 2: GTA Pays GST Under Forward Charge – 5% Without ITC Alternatively, a GTA under forward charge can opt for the lower rate: GST Rate: 5% (2.5% CGST + 2.5% SGST/UTGST, or 5% IGST). ITC Restriction: The GTA cannot claim Input Tax Credit on any inputs or input services under this option. This is the default forward charge rate if a GTA opts for forward charge but does not specifically opt for 12%. Option 3: Reverse Charge Mechanism (RCM) – 5% Paid by Recipient Under the Reverse Charge Mechanism, the liability to pay GST shifts from the GTA (supplier) to the recipient of the service. The rate is: GST Rate: 5% (2.5% CGST + 2.5% SGST/UTGST, or 5% IGST for interstate). Who pays? The recipient — being a specified category (see Section below) — pays this GST. The GTA does not need to collect or remit GST in this case; however, they also cannot claim ITC. Summary GST Rate Table for GTA Services (2026) Charge Mechanism GST Rate ITC by GTA Who Remits GST Best For RCM (Default) 5% No Recipient Small/unregistered GTAs Forward Charge – 5% 5% No GTA Large GTAs, low ITC needs Forward Charge – 12% 12% Yes (Full ITC) GTA GTAs with high input costs Reverse Charge Mechanism (RCM) on GTA – Detailed Analysis The Reverse Charge Mechanism (RCM) is perhaps the most complex and commonly misunderstood aspect of GST on GTA services. Under Section 9(3) of the CGST Act, 2017, the Government has notified specific services where RCM applies — and GTA services are one of them. Who Is Required to Pay GST Under RCM on GTA? As per Notification No. 13/2017-Central Tax (Rate) (as amended up to 2026), any of the following recipients who avail GTA services must pay GST under RCM, provided the GTA has NOT opted for forward charge: Any factory registered under the Factories Act, 1948. Any society registered under the Societies Registration Act, 1860, or under any other law in India. Any co-operative society established by or under any law in force. Any person registered under the CGST Act / SGST Act / UTGST Act / IGST Act. Any body corporate established by or under any law

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GST ON CHARITABLE ACTIVITIES

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GST ON CHARITABLE ACTIVITIES GST and the World of Charitable Activities in India In India, charitable and non-profit organisations — including registered trusts, societies, NGOs, religious institutions, and charitable companies — play a vital role in delivering social services, education, healthcare, and humanitarian relief. However, with the introduction of the Goods and Services Tax (GST) in July 2017, even non-commercial entities are impacted by GST laws in specific circumstances. As of 2026, the GST framework for charitable activities has been refined through multiple GST Council notifications, circulars, and Finance Acts. Understanding whether a charitable activity is taxable, exempt, or zero-rated under GST is critical for legal compliance and efficient fund management. This comprehensive guide covers every aspect of GST on charitable activities — from definitions and exemptions to registration requirements, compliance obligations, and practical case studies relevant to Indian law in 2026. 1. What Are Charitable Activities Under GST Law? The term ‘charitable activities’ is specifically defined under the GST framework. Schedule III of the CGST Act and Notification No. 12/2017-Central Tax (Rate) dated 28 June 2017 (as amended) provide the foundational definitions and exemptions. 1.1 Statutory Definition of Charitable Activities Under GST law, ‘charitable activities’ means activities relating to: Public health by way of care or counselling of terminally ill persons or persons with severe physical or mental disability, persons afflicted with HIV or AIDS, or persons addicted to a dependence-forming substance Advancement of religion, spirituality, or yoga Advancement of educational programmes or skill development relating to abandoned, orphaned, homeless children, physically or mentally abused persons, prisoners, or persons over the age of 65 years residing in a rural area Preservation of environment including watershed, forests, and wildlife Advancement of any other object of general public utility up to a threshold These activities, when conducted by entities registered under Section 12AA or 12AB of the Income Tax Act, 1961, may qualify for GST exemption subject to conditions. 1.2 Key Entities Engaged in Charitable Activities Charitable Trusts registered under the Indian Trusts Act, 1882 Societies registered under the Societies Registration Act, 1860 Companies incorporated under Section 8 of the Companies Act, 2013 (formerly Section 25) Religious and charitable institutions NGOs and Foundations Public Sector Undertakings operating for charitable purposes 2. GST Exemptions Available to Charitable Organisations 2.1 Entry No. 1 – Services by Entity Registered Under Section 12AA As per Sl. No. 1 of Notification No. 12/2017-CT(Rate) (as amended up to 2026), services provided by an entity registered under Section 12AA or 12AB of the Income Tax Act by way of charitable activities are EXEMPT from GST. This means: If an NGO or trust is registered under Section 12AA/12AB and provides services that qualify as ‘charitable activities’ as defined above, those services are not subject to GST. 2.2 Religious Services Exempt from GST The following religious services are exempt under Notification 12/2017 (as amended): Conduct of religious ceremonies Renting of precincts of a religious place owned or managed by a registered charitable/religious trust — subject to conditions on room rent and rental thresholds Services provided by a priest, clergy, or any other person by way of conduct of religious rituals Important Threshold (2026): Renting of rooms where charges are less than ₹1,000 per day, renting of premises/community hall where charges are less than ₹10,000 per day, and renting of shops within religious precincts where monthly rent is less than ₹10,000 remain exempt. 2.3 Educational Services Exemption Educational services provided by NGOs or charitable institutions that are recognised or affiliated are exempt from GST. These include: Pre-school education Education up to higher secondary level (Class XII) Education as a part of a curriculum prescribed for obtaining a qualification recognised by a statutory authority Vocational training courses leading to a certificate or diploma 2.4 Healthcare Services Exemption Health care services provided by a clinical establishment, an authorised medical practitioner, or a para-medic are exempt from GST. Charitable hospitals providing free or subsidised healthcare to the poor also fall under exemption when properly constituted and registered. 2.5 Exemption for Activities of General Public Utility (GPU) Activities of general public utility are exempt only if the entity’s aggregate turnover from such activities does not exceed ₹25 lakh in the preceding financial year (as per 2026 threshold). Beyond this limit, GST may become applicable on commercial activities even if undertaken by a charitable body. 3. When Does GST Apply to Charitable Organisations? Not all activities of a charitable organisation are exempt from GST. GST applies in the following scenarios: 3.1 Commercial Activities Beyond Exemption Scope If a charitable trust generates income from commercial activities — such as selling goods, providing paid consultancy, running a commercial hospital wing, or renting out premises for non-charitable purposes — those activities are subject to GST. 3.2 Aggregate Turnover Exceeds ₹20 Lakh Any entity whose aggregate turnover (including exempt and taxable supplies) exceeds ₹20 lakh per annum (₹10 lakh for special category states) is required to register under GST. However, for Composition Scheme applicability, separate conditions apply. 3.3 Activities Not Qualifying as ‘Charitable’ Under GST If an organisation’s activities do not satisfy the specific definition of charitable activities under Notification 12/2017, those services will be taxable under standard GST rates. For example: Running a commercial coaching institute (not for abandoned/disabled/rural elderly) Selling branded goods or merchandise Organising paid corporate events or conferences Providing paid subscription-based digital content 3.4 Receipt of Foreign Contributions — FCRA and GST Interplay Foreign contributions received under the Foreign Contribution (Regulation) Act (FCRA) 2010 by charitable organisations are not treated as ‘supply’ under GST and hence are NOT subject to GST. However, if services are provided in exchange for those funds to foreign donors, it could potentially be treated as export of services — a complex area requiring specific legal advice. 4. GST Registration for Charitable Organisations 4.1 Mandatory Registration A charitable organisation is required to obtain GST registration if: Its aggregate turnover (taxable + exempt + zero-rated supplies) exceeds ₹20 lakh per year It is engaged in inter-state supply of services (regardless of turnover)

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GST on Development Rights

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GST on Development Rights in India: A Complete Guide (Updated 2026) India’s real estate sector is one of the most dynamic and complex segments of the economy, and the Goods and Services Tax (GST) framework has brought in sweeping changes to how transactions involving land and development are taxed. Among the most nuanced provisions under GST is the taxation on Development Rights — a topic that directly affects landowners, builders, developers, and investors across the country. Whether you are a landowner entering into a Joint Development Agreement (JDA), a builder constructing apartments on transferred land, or a tax professional advising clients, understanding GST on Development Rights is absolutely essential in 2026. This comprehensive guide covers every aspect of GST on Development Rights — from the legal background and applicable GST rates to Input Tax Credit (ITC) eligibility, recent amendments, landmark rulings, and compliance obligations. We have incorporated all updates as per Indian GST law applicable in 2026. 1. Understanding Development Rights: The Legal and Taxation Framework 1.1 What Are Development Rights? Development Rights refer to the rights transferred by a landowner to a developer or builder, authorising them to construct a building or project on the landowner’s plot of land. These rights are typically transferred through a Joint Development Agreement (JDA) or a Development Agreement (DA), which is a contractual arrangement between the landowner and the developer. In Indian real estate practice, Development Rights are categorised under two broad mechanisms: Transfer of Development Rights (TDR): A regulatory tool used in urban planning, especially in cities like Mumbai, where development potential from one plot is transferred to another. Joint Development Agreement (JDA) Rights: Rights granted by a landowner to a developer to develop the land in exchange for a revenue share or a certain number of constructed units. 1.2 Legal Provisions Governing Development Rights Under GST Under GST, development rights are treated as a ‘supply of service.’ The statutory provisions governing GST on development rights are primarily embedded in: Notification No. 4/2018-Central Tax (Rate) dated 25.01.2018 Notification No. 3/2019-Central Tax (Rate) dated 29.03.2019 Notification No. 6/2019-Central Tax (Rate) dated 29.03.2019 Section 7 of the CGST Act, 2017 (defining ‘supply’) Schedule II of the CGST Act, 2017 (activities treated as supply of services) Para 5(b) of Schedule II: Construction of a complex, building, etc., for sale is treated as a supply of service where the consideration is received before the issuance of the completion certificate. 2. GST Applicability on Joint Development Agreements (JDA) 2.1 Nature of Supply in JDA A Joint Development Agreement creates a unique transaction where: The Landowner transfers Development Rights to the Developer. The Developer in exchange provides constructed units (flats, apartments, commercial spaces) or a portion of the sale proceeds to the Landowner. From a GST perspective, both legs of this transaction — the transfer of development rights by the landowner AND the construction service provided by the developer — qualify as separate taxable supplies. 2.2 GST on Transfer of Development Rights by Landowner When a landowner transfers development rights to a developer, it constitutes a supply of service under GST. The key parameters are: Parameter Details Remarks Nature of Supply Service (Transfer of Immovable Property Rights) Para 5(b) Schedule II CGST Act GST Rate 18% (as applicable on date of transfer) Effective from 01.04.2019 Time of Supply Date of Transfer of Development Rights Per Section 13 CGST Act Taxable Person Landowner (supplier) Subject to registration threshold Reverse Charge Mechanism Applicable (Developer pays GST) Notification 4/2018-CT(Rate) Importantly, the Reverse Charge Mechanism (RCM) applies in most cases, meaning the developer (recipient) is liable to pay GST on the transfer of development rights — not the landowner. This is especially relevant where the landowner is an individual and may not be registered under GST. 2.3 GST on Construction Services by Developer to Landowner When the developer agrees to provide constructed units to the landowner as consideration for the development rights, the developer is essentially rendering a construction service. This triggers a separate GST liability for the developer. Scenario GST Rate Note Affordable Housing Units to Landowner 1% (without ITC) Units priced up to Rs. 45 Lakh Non-Affordable Housing Units to Landowner 5% (without ITC) All other residential projects Commercial Units to Landowner 12% (with ITC) As per GST rate schedule 3. GST Rates Applicable on Development Rights — 2026 Updated Schedule 3.1 Consolidated GST Rate Table for Real Estate and Development Rights Transaction Type GST Rate ITC Availability Transfer of Development Rights (TDR/JDA) — Under RCM 18% Developer can avail ITC Construction of Affordable Housing (for sale) 1% No ITC Construction of Non-Affordable Residential Housing (for sale) 5% No ITC Commercial Real Estate (for sale before completion) 12% ITC Available Works Contract Services (for construction) 18% ITC Available (for further taxable supply) Long-term Lease (over 30 years) 18% On 1/3rd value after land deduction Rental of Commercial Property 18% ITC Available Transfer of FSI / Additional FSI 18% (under RCM) As per notification 3.2 Affordable vs. Non-Affordable Housing: Definition as per 2026 The distinction between affordable and non-affordable housing is critical for determining the correct GST rate. As per the current provisions in 2026: City Category Carpet Area Limit Value Cap Metropolitan Cities (Delhi-NCR, Mumbai, Bengaluru, Hyderabad, Chennai, Kolkata) Up to 60 sq. metres Up to Rs. 45 Lakh Other Cities and Towns Up to 90 sq. metres Up to Rs. 45 Lakh Both conditions — carpet area AND value — must be satisfied simultaneously for a project to qualify as affordable housing for the purpose of the 1% GST rate. 4. Reverse Charge Mechanism (RCM) on Development Rights 4.1 How RCM Works in Development Rights Transactions The Reverse Charge Mechanism is a pivotal feature of GST on development rights. Under RCM, the developer (recipient of the development rights service) becomes liable to pay GST instead of the landowner (supplier). This provision was introduced to ensure GST compliance even in cases where landowners are unregistered individuals. 4.2 Key Conditions for RCM to Apply The supplier (landowner) must be any

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GSTR-10: Final Return on Cancellation

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GSTR-10: Final Return on Cancellation GSTR-10 – Final Return on GST Cancellation: Everything You Must Know in 2026 When a business decides to wind down, restructure, or voluntarily surrenders its GST registration — or when the GST officer cancels a registration suo motu — the journey does not simply end with cancellation. Indian GST law mandates one final, critical compliance step: the filing of GSTR-10, also known as the Final Return. GSTR-10 is not just a formality. It is the last legal obligation that a cancelled GST registrant must fulfil — a comprehensive declaration of all assets (inputs, semi-finished goods, finished goods, and capital assets) held as on the date of cancellation. Failure to file it correctly, or at all, can result in penalties of up to ₹20,000 and sustained tax liability with interest at 18% per annum on unrecovered Input Tax Credit (ITC). This guide — fully updated for 2026 — is your definitive reference for understanding, preparing, and filing GSTR-10 without stress. Whether you are a business owner, a Chartered Accountant, a GST practitioner, or a compliance officer, this article covers every angle of GSTR-10 in plain, actionable language. 1. What Is GSTR-10? Definition and Legal Basis GSTR-10 is a one-time return that must be filed by every registered taxpayer whose GST registration has been cancelled or surrendered. It is prescribed under Section 45 of the Central Goods and Services Tax (CGST) Act, 2017, read with Rule 81 of the CGST Rules, 2017. Unlike periodic returns (GSTR-1, GSTR-3B), GSTR-10 is filed only once — after the effective date of cancellation. It serves as a closing statement that accounts for all taxable goods and capital assets held by the taxpayer on the date their registration ceased, ensuring that any Input Tax Credit availed on those assets is reversed and the tax liability is discharged before the taxpayer formally exits the GST system. Legal Provisions Governing GSTR-10 Section 45, CGST Act 2017: Mandates filing of a final return by every person whose registration is cancelled. Rule 81, CGST Rules 2017: Prescribes the format, time limit, and procedure for filing GSTR-10. Section 29, CGST Act 2017: Deals with cancellation of GST registration — the trigger event for GSTR-10. Section 73/74, CGST Act 2017: Governs assessment and demand of tax — applicable where GSTR-10 is not filed. Notification No. 08/2023 – Central Tax (Amnesty Scheme): Provided one-time waiver of late fees for GSTR-10 filers who had missed the deadline. 2. Who Is Required to File GSTR-10? Every registered taxpayer whose GST registration has been cancelled or surrendered is legally obligated to file GSTR-10. This includes all types of cancellation scenarios: Mandatory Filers of GSTR-10 Businesses that voluntarily apply for cancellation of GST registration (e.g., business closure, sale of business, restructuring). Businesses whose GST registration has been cancelled by the tax officer due to non-compliance, non-filing of returns, or fraud. Partnership firms dissolved due to retirement or death of a partner. Proprietorship concerns where the proprietor passes away or discontinues business. Companies wound up under the Insolvency and Bankruptcy Code (IBC) or Companies Act, 2013. Businesses that have migrated to the Composition Scheme from Regular Registration (note: different treatment may apply). Exporters or SEZ units whose registration is cancelled. Who Is EXEMPT from Filing GSTR-10? Taxpayers who have converted from Regular to Composition scheme are NOT required to file GSTR-10 for this conversion. Input Service Distributors (ISDs), Non-Resident Taxable Persons, and TDS/TCS deductors whose registrations are cancelled follow specific return provisions and do not file GSTR-10. Taxpayers whose registration was cancelled and then revoked (reinstated) — they continue with their regular return obligations as if cancellation never occurred. 3. Due Date for Filing GSTR-10 in 2026 The due date for filing GSTR-10 is a critical compliance parameter. Missing it triggers automatic late fee accumulation, which can be substantial. Statutory Time Limit As per Section 45 and Rule 81 of the CGST Act/Rules, GSTR-10 must be filed within THREE MONTHS from the date of order of cancellation OR the date of cancellation — whichever is later. Example: If your GST registration was cancelled (effective date) on 15th February 2026 and the cancellation order was issued on 28th February 2026, then GSTR-10 must be filed by 31st May 2026 (3 months from the later date, i.e., 28th February 2026). Key Points About the Due Date The ‘3-month’ period is calculated from the ORDER date of cancellation, not necessarily the effective date specified in the cancellation application. If the taxpayer applied for voluntary cancellation and the order was delayed by the GST officer, the clock starts from the order date — providing some relief. There is no provision for automatic extension of the GSTR-10 due date. Any extension must be specifically notified by the GST Council/CBIC. CBIC has in the past issued special extensions — e.g., Amnesty Scheme under Notification No. 08/2023 CT extended the deadline for historical defaulters up to 31st August 2023 with waived/reduced late fees. Similar schemes may be announced in future GST Councils — monitor CBIC notifications at cbic.gov.in. 4. Late Fee and Penalty for Not Filing GSTR-10: 2026 Update The consequences of not filing GSTR-10 on time are severe and automatic under GST law. Here is the complete penalty structure as applicable in 2026: Scenario Late Fee Per Day Max Cap Effective From CGST – Delay in Filing GSTR-10 ₹200 per day ₹10,000 GST Amendment Act 2023 SGST – Delay in Filing GSTR-10 ₹200 per day ₹10,000 GST Amendment Act 2023 Combined Late Fee (CGST+SGST) ₹400 per day ₹20,000 As applicable Amnesty Scheme (if availed) Reduced / Nil As notified GST Council Notifications Tax Liability on unreversed ITC Interest @ 18% p.a. No cap Section 50 CGST Act Important Note: In addition to the late fee capped at ₹20,000 (CGST + SGST combined), the taxpayer also faces interest liability at 18% per annum under Section 50 of the CGST Act on any tax amount that remains unpaid (particularly on ITC that should have been reversed but was not). There is

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GST ON ENTERTAINMENT & EVENTS

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GST ON ENTERTAINMENT & EVENTS The Vibrant Intersection of GST and India’s Entertainment Economy India’s entertainment and events industry is one of the fastest-growing sectors of the economy. From Bollywood blockbusters and cricket extravaganzas to destination weddings, music festivals, corporate conferences, and digital streaming platforms — the scale and diversity of this sector is unparalleled. The Indian live events industry alone is projected to surpass ₹12,000 crore in 2026, while the broader media and entertainment (M&E) sector is expected to reach ₹3.08 lakh crore. The introduction of GST in July 2017 replaced the complex web of Entertainment Tax, Service Tax, VAT, and Octroi with a unified indirect tax framework. For event organisers, venue owners, performers, sponsors, and ticket-booking platforms, understanding GST is no longer optional — it is a fundamental business requirement. This comprehensive guide covers every dimension of GST as it applies to the entertainment and events industry in India in 2026 — from applicable rates and exemptions to Input Tax Credit, reverse charge, e-ticketing, and sector-specific treatment. Whether you are organising a Bollywood concert, managing a wedding, or running an OTT platform, this guide is your definitive reference. Pre-GST Era vs. Post-GST Era: The Big Shift in Entertainment Taxation 1.1 The Pre-GST Complexity Before July 2017, the entertainment and events industry was subject to a maze of overlapping taxes: Entertainment Tax: Levied by State Governments on cinema, theatre, live shows, amusement parks — rates varied from 10% to 110% across states Service Tax: Charged by Central Government on event management, ticketing, and related services at 15% VAT: On sale of goods at events (food, merchandise) Luxury Tax: On hotel rooms and banquet bookings Octroi / Entry Tax: On equipment and materials moved across state borders This fragmented structure made pricing unpredictable, compliance burdensome, and cross-state operations difficult for event companies. 1.2 Post-GST Simplification (2017–2026) GST subsumed Entertainment Tax (partially), Service Tax, and VAT into a unified framework. Key improvements include: Single registration threshold (₹20 lakh) instead of state-by-state registration for each tax Seamless Input Tax Credit across the supply chain Uniform GST rates applicable nationwide (with some state-level variations for cinema retained within the GST framework) Digital compliance through GSTN portal replacing physical paperwork Note: While GST has simplified the framework significantly, entertainment and events remains one of the more complex sectors due to the variety of services involved, multi-party contracts, and cross-state operations. GST Rate Structure for Entertainment & Events in India (2026) The GST rate applicable to entertainment and events services depends on the nature of the activity, the venue, and the ticket or service price. Here is the comprehensive rate table as of 2026: Nature of Service / Supply GST Rate (2026) Admission to cinema (ticket ≤ ₹100) 12% Admission to cinema (ticket > ₹100) 18% Admission to theatre, cultural events 18% Admission to sporting events (IPL, ISL, etc.) 28% Admission to amusement parks / theme parks 18% Admission to circus, dance performances 28% Admission to concerts & live music events 18% Event management services 18% Outdoor catering at events 5% (without ITC) / 18% (with ITC) Supply of food at restaurants within multiplex 5% Renting of event venue / banquet hall 18% Temporary structure (shamiana, tent) rental 18% Sound, light & AV equipment rental 18% OTT / digital streaming subscriptions 18% Sale of online event tickets (platform fee) 18% Sponsorship services 18% Artist / performer fees (RCM applicable) 18% Photography / videography at events 18% Security services at events 18% Decorators / floral arrangement services 18% Fireworks display (goods component) 28% Printing of event tickets / brochures 12% Trade fair / exhibition stall rental 18% Important (2026 Update): The GST Council in its 53rd meeting reaffirmed the two-tier cinema ticket rate structure (12%/18%) and continued the 28% rate on admission to sporting events. State governments retain the right to levy State Entertainment Tax on certain local events within the GST framework. GST on Cinema and Film Industry 3.1 Admission to Cinema Halls The GST rate on cinema tickets was rationalised after the 28th GST Council meeting and subsequently retained in the following structure: Tickets priced up to ₹100: GST @ 12% Tickets priced above ₹100: GST @ 18% Example: A multiplex charges ₹250 for a premium seat. GST = 18% of ₹250 = ₹45. Total ticket price to customer = ₹295. 3.2 GST on Film Production Services Film production involves a complex web of services, each attracting GST: Studio rental and set construction: 18% Equipment rental (cameras, cranes, lighting): 18% Post-production services (VFX, editing, dubbing): 18% Music recording and licensing: 18% Distribution rights (sale of theatrical rights): 12% Satellite / OTT rights sale: 18% 3.3 GST on Film Distribution The distribution of films involves a chain: Producer → Distributor → Exhibitor. Each transaction may involve taxable supply: Minimum Guarantee (MG) payments from distributor to producer: Taxable at 12% (sale/transfer of rights) Revenue sharing arrangements: Each party accounts for GST on their share Theatrical exhibition services by multiplexes: 12%/18% on admission based on ticket price 3.4 GST on Promotional Activities Film promotions — including promotional events, press conferences, and brand integrations — are taxable at 18%. Brands paying for product placements in films must account for GST at 18% on the consideration paid. GST on Live Events, Concerts & Music Festivals 4.1 Admission to Live Concerts Tickets sold for live music concerts, stand-up comedy shows, drama performances, and cultural events attract GST at 18%. The event organiser must charge GST on the ticket price and deposit the same with the government. Practical Example — Music Festival: Particulars Amount (₹) Ticket Price (Base) ₹2,500 GST @ 18% ₹450 Total Ticket Price (Consumer Pays) ₹2,950 Convenience Fee (Booking Platform) ₹100 + 18% GST = ₹118 Total Amount Paid by Consumer ₹3,068 4.2 Event Management Company’s GST Liability An event management company providing end-to-end services (venue selection, artist coordination, sound, décor, catering) for a live event is providing a composite supply. The principal supply determines the GST rate — generally 18%. Key considerations: If the event management

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GST APPEALS IN INDIA 2026

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GST Appeals in India 2026: CIT(A), GSTAT, High Court & Supreme Court — A Complete Guide Goods and Services Tax (GST) has fundamentally transformed India’s indirect tax landscape since its introduction on 1st July 2017. However, disputes between taxpayers and tax authorities remain an inevitable reality. Whether it is a demand notice, rejection of Input Tax Credit (ITC), or a penalty order — every registered taxpayer must know the appellate remedies available under the GST law. This comprehensive guide walks you through the complete GST appellate hierarchy in India for 2026, covering the Commissioner of Income Tax (Appeals) equivalent forums, GST Appellate Tribunal (GSTAT), High Courts, and the Supreme Court of India. In 2026, with the GST Appellate Tribunal (GSTAT) now fully operational across various benches in India, the appellate landscape has significantly evolved. This guide reflects all updated procedures, time limits, pre-deposit requirements, and legal nuances relevant for Indian taxpayers and tax professionals. Understanding the GST Appellate Hierarchy in India The GST law in India provides a structured, multi-tiered mechanism for taxpayers to challenge orders issued by tax authorities. The appellate machinery under the CGST Act, 2017 and respective SGST Acts creates a logical ladder that taxpayers must climb — starting from the first appellate authority and going up to the apex court. The Four-Tier GST Appellate Structure Tier Forum Authority Applicable Section 1st Appellate Authority (AA) Commissioner/Joint Commissioner (Appeals) Section 107 2nd GST Appellate Tribunal (GSTAT) Judicial & Technical Members Section 109-111 3rd High Court Division Bench Section 117 4th Supreme Court of India Apex Court Section 118 First Appellate Authority (AA) – Section 107 of CGST Act The First Appellate Authority (FAA) is the entry point for any taxpayer aggrieved by an order passed by a GST officer. Under Section 107 of the Central Goods and Services Tax Act, 2017, both taxpayers and the department have the right to file an appeal before the Appellate Authority. Who is the Appellate Authority under GST? Under CGST Rules, the Appellate Authority is typically the: Commissioner (Appeals) for orders passed by officers up to the rank of Additional Commissioner Additional Commissioner (Appeals) for orders issued by officers up to Deputy Commissioner Joint Commissioner (Appeals) — a new designation introduced to handle increased pendency Time Limit for Filing Appeal Before FAA As per Section 107(1) of CGST Act, an appeal must be filed within 3 months from the date of communication of the order. The appellate authority may condone delay up to an additional 1 month if sufficient cause is demonstrated. Important: In cases of fraud or wilful misstatement, the time limits may differ. Always check specific provisions applicable to your case. Pre-Deposit Requirement under Section 107(6) A taxpayer filing an appeal before the First Appellate Authority is required to mandatorily pre-deposit: 10% of the disputed tax amount as mandatory pre-deposit Full payment of undisputed tax, interest, penalty, fee or other charges arising from the order Particulars Requirement Disputed Tax Amount (Example) ₹10,00,000 Mandatory Pre-Deposit (10%) ₹1,00,000 Undisputed Amount Full Payment Required Balance Disputed Amount Subject to Stay/Recovery Proceedings Documents Required for Filing Appeal Before FAA FORM GST APL-01 (Statement of Grounds of Appeal) — filed online on GST portal Certified copy of the order against which appeal is filed Proof of pre-deposit payment (Challan / DRC-03) Statement of facts and grounds of appeal Supporting evidence and documents relied upon Authorization letter if filed through Tax Advocate or CA Departmental Appeal Before FAA Under Section 107(2), the Commissioner or any officer authorized by him can also file an appeal against any order of an adjudicating authority within 6 months from the date of communication of the order. This is commonly referred to as a departmental appeal. Powers of the Appellate Authority The Appellate Authority under Section 107(11) has wide powers including: Confirming, modifying or annulling the order under challenge Remanding the matter back to the adjudicating officer for fresh decision Enhancing the assessment or penalty — but only after giving the appellant an opportunity of being heard The principle of ‘no enhancement without notice’ is sacrosanct — the FAA cannot enhance demand or penalty without first issuing a notice to the taxpayer. GST Appellate Tribunal (GSTAT) – Sections 109 to 111 The GST Appellate Tribunal (GSTAT) is the second appellate forum under the GST law and represents a critical milestone in GST dispute resolution. After years of delay, GSTAT became fully operational in 2024-25, and by 2026, benches are functioning across multiple States and Union Territories in India. Composition of GSTAT As per Section 110 of CGST Act, GSTAT comprises: Principal Bench at New Delhi — headed by the President (who must be a retired Supreme Court Judge or a retired Chief Justice of a High Court) State Benches / Area Benches — each headed by a Judicial Member (retired High Court Judge) and a Technical Member (retired IRS/IAS officer of specified rank) National Bench — to handle matters involving divergence of opinions between State Benches Filing Appeal Before GSTAT – Section 112 An aggrieved person may file an appeal before the Appellate Tribunal against an order passed by the Appellate Authority or the Revisional Authority within 3 months from the date of communication of the order. Pre-Deposit for GSTAT Appeal – Section 112(8) Mandatory pre-deposit: 20% of the disputed tax amount (in addition to the 10% already deposited before FAA) Total cumulative pre-deposit for GSTAT appeal = 10% (for FAA) + 20% (for GSTAT) = 30% of disputed tax Stage Pre-Deposit Requirement FAA Level (Section 107) 10% of disputed tax GSTAT Level (Section 112) Additional 20% of disputed tax High Court (Section 117) No Mandatory Pre-Deposit (Court’s Discretion) Supreme Court (Section 118) No Mandatory Pre-Deposit (Court’s Discretion) Form for GSTAT Appeal Appeal is filed in FORM GST APL-05 on the GST common portal Cross-objections are filed in FORM GST APL-06 Application for stay of recovery is filed separately GSTAT Benches Operational in 2026 As of 2026, GSTAT benches are operational / being operationalized in the following jurisdictions: New Delhi

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GST AUDIT BY TAX AUTHORITIES Section 65 | Section 66 | ADT-01 to ADT-04 | Complete 2026 Guide Everything Indian Taxpayers & GST Professionals Must Know

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GST Audit by Tax Authorities in India 2026: Section 65, Section 66 & Everything You Need to Know Goods and Services Tax (GST) in India has ushered in a new era of tax transparency and compliance. But with greater compliance comes greater scrutiny. One of the most significant tools available with GST tax authorities is the power to conduct a GST Audit — a systematic examination of the taxpayer’s records, books of accounts, returns, and documents to verify the correctness of tax declared, ITC availed, refunds claimed, and overall GST compliance. In 2026, GST audits by tax authorities have become increasingly data-driven and intelligence-based, leveraging AI-based risk profiling, GSTN analytics, and cross-matching of GSTR-1, GSTR-3B, GSTR-2A/2B, and e-Invoice data. Understanding what a GST audit entails, how to prepare, and what rights you have as a taxpayer is critical for every registered person under GST. This comprehensive guide covers every aspect of GST Audit by Tax Authorities in India — from the legal provisions and types of audits to audit notices, procedures, taxpayer rights, penalties, and actionable audit preparation strategies. What is a GST Audit by Tax Authorities? A GST Audit by tax authorities is a formal inspection of a registered taxpayer’s business records, books of accounts, GST returns, invoices, and other relevant documents by an authorised GST officer. The objective is to verify that the taxpayer has: Correctly declared their taxable turnover and output tax liability Properly availed Input Tax Credit (ITC) and not claimed excess or ineligible ITC Accurately claimed GST refunds, if applicable Maintained proper books of accounts and records as mandated under GST law Discharged all tax liabilities on time GST audit by tax authorities is distinctly different from the GSTR-9C reconciliation statement audit (conducted by a Chartered Accountant or Cost Accountant). A departmental audit is conducted by GST officers themselves and carries quasi-judicial powers including the authority to raise a demand and penalty. Legal Provisions Governing GST Audit by Tax Authorities GST Audit by tax authorities is primarily governed by two sections of the Central Goods and Services Tax (CGST) Act, 2017, read with the CGST Rules, 2017: Section 65 – Audit by Tax Authorities (Departmental Audit) Section 65 of the CGST Act, 2017 empowers the Commissioner or any officer authorised by him to undertake audit of any registered person. Key features: The audit may be conducted at the place of business of the registered person OR at the GST office The registered person must be given a notice (FORM GST ADT-01) at least 15 working days before commencement of audit The period of audit shall be completed within 3 months from commencement. This period can be extended by the Commissioner for a further period of 6 months for reasons to be recorded in writing Upon completion of audit, the officer shall inform the person of his findings, discrepancies noticed, and rights — this is done via FORM GST ADT-02 Section 66 – Special Audit Section 66 of the CGST Act, 2017 provides for a Special Audit — a more intensive audit ordered by the Assistant Commissioner (AC) or Deputy Commissioner (DC) with prior approval of the Commissioner. Key aspects: Ordered when, during scrutiny/inquiry/investigation, the AC/DC is of the opinion that the value declared is not correct or the ITC availed is not within normal limits The audit is conducted by a Chartered Accountant or Cost Accountant nominated by the Commissioner — at the expense of the department (not the taxpayer) The nominated CA/CMA must submit their report (FORM GST ADT-04) within 90 days, extendable by a further 90 days The taxpayer is given an opportunity to be heard before any action is taken on the audit report Relevant CGST Rules Rule No. Subject Matter Rule 101 Audit by Tax Authorities – Procedure and Forms (ADT-01, ADT-02) Rule 102 Special Audit – Procedure, CA/CMA Nomination, and Forms (ADT-03, ADT-04) Rule 56 Maintenance of Accounts and Records — mandatory requirements for audit Rule 60 Details of ITC — basis for ITC verification during audit Types of GST Audits in India (2026) It is important to distinguish between the various types of audits under GST, as each has a different trigger, authority, and implication for the taxpayer: 1. Departmental Audit (Section 65) This is the most common type of GST audit conducted by tax officers at the GST department. It involves a comprehensive review of the taxpayer’s books, returns, and documents at their place of business or the tax office. It is risk-based and driven by data analytics from the GSTN system. 2. Special Audit (Section 66) Ordered in complex cases where routine departmental review is insufficient. A government-nominated CA or CMA conducts this audit at the department’s cost. It is typically triggered in cases involving large ITC claims, complex business structures, or suspected tax evasion. 3. Scrutiny of Returns (Section 61) This is not technically an ‘audit’ but is often the precursor to a formal audit. Under Section 61, the tax officer scrutinises the filed GST returns and may send a notice (FORM GST ASMT-10) if discrepancies are found. If unsatisfied with the response, the officer may initiate a formal audit under Section 65. 4. Annual Return Audit (GSTR-9C) — Turnover-Based Taxpayers with aggregate annual turnover exceeding ₹5 Crore in a financial year are required to file a Reconciliation Statement in FORM GSTR-9C, certified by a Chartered Accountant or Cost Accountant. While this is not a ‘departmental audit’, discrepancies highlighted in GSTR-9C often trigger departmental scrutiny. 5. Anti-Evasion / Intelligence-Based Audit Conducted by GST Intelligence Wings (DGGI — Directorate General of GST Intelligence), these are specifically targeted audits based on intelligence inputs, tip-offs, or inter-agency data sharing (Income Tax, Customs, FEMA, etc.). These often culminate in search, seizure, and arrest in serious cases. Type of Audit Legal Basis Conducted By Trigger Departmental Audit Section 65, CGST Act GST Commissioner / Authorised Officer Risk profiling, GSTN analytics, random selection Special Audit Section 66, CGST Act CA/CMA nominated by Commissioner Complex cases, suspected value/ITC manipulation Scrutiny of Returns

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ISD – Input Service Distributor Mechanism

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ISD – Input Service Distributor Mechanism Complete GST Guide for Indian Businesses | Updated 2026 ISD – Input Service Distributor Mechanism Under GST: The Definitive Guide (2026) In any large organisation with multiple business units, branches, or subsidiaries operating across India, it is common practice for a centralised head office or corporate office to procure certain common services — such as legal advisory, IT infrastructure, software licences, management consultancy, or audit services — on behalf of the entire organisation. The critical question that arises under the Goods and Services Tax (GST) framework is: How should the Input Tax Credit (ITC) on such commonly procured services be distributed to the various branches or units that actually consume those services? This is precisely where the Input Service Distributor (ISD) mechanism under GST plays a transformative role. The ISD is a formal, legally recognised mechanism that enables a head office or centralised registration holder to receive invoices for input services and distribute the corresponding ITC to all its branches or units registered under GST. As of 2026, with several landmark amendments including those introduced through the Finance Act 2024 making ISD mandatory for certain transactions, understanding this mechanism in its entirety has never been more critical for Indian businesses. This blog is your complete, authoritative, and updated guide to the ISD mechanism under GST in India — covering every dimension from legal provisions and eligibility to practical compliance, GSTR-6 filing, ITC distribution formulas, and the important 2024 amendments that took effect from April 2025. 1. What Is an Input Service Distributor (ISD)? — Definition and Concept 1.1 Statutory Definition of ISD Under the CGST Act Section 2(61) of the Central Goods and Services Tax (CGST) Act, 2017 defines an Input Service Distributor (ISD) as follows: Statutory Definition — Section 2(61) CGST Act, 2017 “Input Service Distributor means an office of the supplier of goods or services or both which receives tax invoices issued under Section 31 towards the receipt of input services and issues a prescribed document for the purposes of distributing the credit of central tax, State tax, integrated tax or Union territory tax paid on the said services to a supplier of taxable goods or services or both having the same Permanent Account Number as that of the said office.” 1.2 Simplified Explanation In plain language, an Input Service Distributor is essentially a distribution mechanism — not a separate entity, but a specific registration of an office (usually the head office or corporate headquarters) that: Receives invoices for common input services procured centrally. Avails the Input Tax Credit on those services. Distributes that ITC proportionately to all connected branches, units, or establishments that share the same PAN and are registered under GST. 1.3 The Core Problem ISD Solves Before the ISD mechanism, there was no standardised way for organisations to distribute the ITC from centrally procured services to their consuming units. Without ISD, the head office would be left with accumulated ITC that could not be legitimately transferred to branches — leading to stuck credit and increased tax costs. The ISD mechanism solves this by creating a formal, transparent, and auditable distribution pathway. 2. Legal Framework Governing ISD in 2026 2.1 Key Statutory Provisions The ISD mechanism is governed by a robust set of statutory provisions and rules under the GST framework. Here are the primary legal references: Provision Description Relevance Section 2(61) CGST Act Definition of Input Service Distributor Defines the scope of ISD Section 20 CGST Act Manner of distribution of credit by ISD Core ISD distribution rules Rule 39 CGST Rules, 2017 Procedure for distribution of ITC by ISD Detailed procedural rules Section 48 CGST Act Returns to be filed by ISD GSTR-6 filing obligation Finance Act 2024 Mandatory ISD for common services among distinct persons Major 2024 amendment Notification 50/2023-CT Amendment expanding ISD provisions Effective from 01.04.2025 Rule 54(1) CGST Rules ISD Invoice format requirements Document issuance rules 2.2 The Finance Act 2024 Amendment — A Game Changer The Finance Act 2024 introduced a landmark amendment to Section 20 of the CGST Act, which became effective from 01 April 2025. This amendment made the ISD mechanism MANDATORY for distributing ITC on certain common services received by a head office on behalf of its branches. Previously, the ISD route was optional — companies could distribute credit through cross-charges or the ISD route. Now, for specific categories of common input services, the ISD route is the only permissible method. Critical 2024 Amendment Alert With effect from 01 April 2025, it is mandatory for a registered person (head office) to register as an ISD and distribute ITC through the ISD mechanism when receiving common input services on behalf of its branches (distinct persons under GST). The alternative method of ‘cross-charging’ is no longer permissible for common input services under GST law. Businesses that have not yet transitioned to mandatory ISD registration must do so immediately to avoid ITC disallowance and penalties. 3. ISD vs. Cross-Charge: Understanding the Difference in 2026 3.1 What Is Cross-Charge? Cross-charge refers to the practice of one GST registration (head office) raising a tax invoice on another GST registration of the same entity (branch) for services or supplies made between them. Before the 2024 amendment, many organisations used cross-charge as an alternative to ISD for distributing common service costs. 3.2 Comparative Analysis: ISD vs. Cross-Charge Parameter ISD Mechanism Cross-Charge Legal Basis Section 20 CGST Act + Rule 39 Section 7 read with Schedule I CGST Act Mandatory Post-April 2025? YES — for common input services NOT permitted for common input services Invoice Type ISD Invoice / ISD Credit Note Regular Tax Invoice GST Return GSTR-6 (by ISD) + GSTR-2A/2B of recipient GSTR-1 of supplier + GSTR-3B of recipient ITC Distribution Proportionate (based on turnover formula) As per actual cost allocation Value of Supply No taxable value — only ITC distribution Taxable value plus applicable GST rate Best Use Case Distributing ITC on common input services Restricted post April 2025 amendment Risk of Challenge Lower (compliant

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GSTR-7 – TDS Under GST Returns

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GSTR-7 – TDS Under GST Returns A Complete Guide for 2026 | Indian GST Law GSTR-7 and TDS Under GST The Goods and Services Tax (GST) framework in India, introduced on 1st July 2017, brought a unified taxation system that revolutionised the way businesses and government entities handle tax compliance. Among the various return forms under GST, GSTR-7 holds a unique and critical position — it is the return specifically filed by persons who are required to deduct Tax Deducted at Source (TDS) under the GST regime. As of 2026, the GST TDS mechanism has become a well-established compliance requirement for a large section of government entities, public sector undertakings, and certain notified bodies. Understanding GSTR-7 in its entirety — from eligibility to filing, from penalties to refunds — is essential for every GST-registered TDS deductor and supplier dealing with such entities. This comprehensive guide covers every aspect of GSTR-7 and TDS under GST, updated with the latest provisions, amendments, and notifications applicable in 2026 under Indian law. What is TDS Under GST? Tax Deducted at Source (TDS) under GST is a mechanism whereby the recipient (deductor) of goods or services deducts a specified percentage of the tax amount from the payment made to the supplier (deductee) and deposits it with the government. This provision is governed by Section 51 of the CGST Act, 2017. TDS under GST was initially notified and made effective from 1st October 2018 and has been an integral part of GST compliance since then. The deducted amount is reflected as a credit in the electronic cash ledger of the supplier. Purpose of TDS Under GST Prevents tax evasion by ensuring tax is deposited at the source of transaction Creates a digital audit trail of government-related B2B transactions Ensures timely remittance of GST to the government exchequer Reduces the burden on tax authorities to chase unpaid liabilities Improves transparency in government procurement and contracting What is GSTR-7? GSTR-7 is a monthly return filed by every registered person who is required to deduct TDS under Section 51 of the CGST Act, 2017. This return contains details of: TDS deducted during the month Amount of TDS paid to the government TDS refund claimed if any Any amendments to earlier returns GSTR-7 is auto-populated in GSTR-7A for the deductee (supplier), giving the supplier visibility of the TDS deducted against their GSTIN. The supplier can then use this credit against their tax liability. Key Features of GSTR-7 Monthly filing mandatory — even if no TDS was deducted during the month (Nil return required) Filed on the GSTN portal at www.gst.gov.in Applicable for both CGST + SGST (for intra-state supply) and IGST (for inter-state supply) Deductee can accept or reject TDS in GSTR-7A Late fees and interest apply on delayed or incorrect filing Who is Required to Deduct TDS Under GST? (Section 51) As per Section 51 of the CGST Act, 2017 and relevant notifications issued under it, the following entities are mandatorily required to deduct TDS under GST in 2026: Category Applicable Entities Central Government All departments, ministries, and attached offices State Governments All state departments and sub-offices Local Authorities Municipal corporations, Panchayats, etc. Governmental Authorities Societies, boards, etc. set up by govt. with 51%+ govt. equity PSUs / Govt. Companies Companies under Section 2(45) of Companies Act with majority government ownership Society registered under Societies Registration Act Established by the Central/State Government CAMPA – Compensatory Afforestation Fund Specific fund notified under GST Authorities set up under Parliament/State Legislature Acts As notified by CBIC from time to time Note: Private companies and individuals, even if they are government contractors, are NOT required to deduct TDS under GST unless specifically notified. Threshold Limit for TDS Deduction Under GST TDS under GST is applicable only when the total value of taxable supply under a single contract between the deductor and supplier exceeds Rs. 2,50,000 (Rupees Two Lakh Fifty Thousand). Important: Threshold Rules for 2026 • The threshold of Rs. 2,50,000 applies to the contract value, not individual invoice value. • If a contract spans multiple invoices, the total contract value determines applicability. • Exempt supplies and supplies on which GST is not chargeable are excluded from the contract value for TDS computation. • TDS is deducted on the taxable value (before GST), NOT on the total invoice amount including GST. • Where CGST + SGST or IGST is charged separately, TDS is calculated only on the base supply value. Rate of TDS Deduction Under GST (2026) The rate of TDS deduction under GST as applicable in 2026 is as follows: Type of Supply CGST TDS Rate SGST/UTGST TDS Rate IGST TDS Rate Total TDS Rate Intra-State Supply 1% 1% Nil 2% Inter-State Supply Nil Nil 2% 2% The total effective TDS rate is 2% in all cases, whether intra-state or inter-state. TDS is deducted on the value of taxable supply, excluding GST. Illustration with Example (2026) Suppose a State Government department issues a work order of Rs. 5,00,000 (taxable value) to a contractor for civil construction work. The applicable GST rate is 12%. Particulars Amount (Rs.) Contract/Invoice Taxable Value 5,00,000 GST @ 12% (CGST 6% + SGST 6%) 60,000 Total Invoice Value 5,60,000 TDS Deductible @ 2% of Rs. 5,00,000 10,000 (CGST Rs. 5,000 + SGST Rs. 5,000) Actual Payment to Contractor 5,50,000 TDS Deposited to Government 10,000 GST Registration for TDS Deductors Every entity required to deduct TDS under GST must obtain a separate GSTIN specifically for TDS purposes, even if they already hold a GSTIN for their regular taxable supplies. The registration for TDS deductor is distinct from regular GST registration. Process of TDS Registration Under GST Visit the GSTN portal at www.gst.gov.in Click on ‘Services’ > ‘Registration’ > ‘New Registration’ Select Taxpayer Type as ‘Tax Deductor’ Fill in PAN, legal name, state, and authorised signatory details Upload required documents (authorisation letter, PAN, address proof) Submit the application — ARN is generated After verification, GSTIN is issued for TDS purpose Once registered, the TDS deductor receives a unique GSTIN

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GST on Electricity in India Complete Guide 2026

GST on Goods Transport

GST ON CHARITABLE ACTIVITIES

GST on Development Rights

GSTR-10: Final Return on Cancellation

GST ON ENTERTAINMENT & EVENTS

GST APPEALS IN INDIA 2026

GST AUDIT BY TAX AUTHORITIES Section 65 | Section 66 | ADT-01 to ADT-04 | Complete 2026 Guide Everything Indian Taxpayers & GST Professionals Must Know

ISD – Input Service Distributor Mechanism

GSTR-7 – TDS Under GST Returns

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