GST Council Newsletter December 2025

GST NEWSLETTER

GST COUNCIL SECRETARIAT

ISSUE-81, DECEMBER 2025

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MESSAGE

The Fifth National Coordination Meeting of the State and Central GST administrations was held on December 13ᵗʰ, 2025 as a follow-up to the earlier coordination meeting. The discussions centred on systemic reforms under GST with dedicated working groups reviewing key functional areas. The focus remained on identifying operational issues and suggesting technology-driven and taxpayer-friendly improvements to further strengthen the GST framework.

During the month, important changes were introduced in the taxation of pan masala and tobacco-related products. A revised rate structure has been notified with effect from February 1ˢᵗ, 2026, whereby bidi has been brought under the 18% GST rate, while pan masala, various forms of tobacco (other than bidis), cigarettes and nicotine-based inhalation products have been placed under the 40% GST rate. At the same time, a special valuation mechanism based on the declared retail sale price has been introduced for these products, and the levy of compensation cess on specified pan masala and tobacco products has been withdrawn.

GSTN has enabled an online facility on the GST Portal for filing opt-in declarations to declare hotel accommodation premises as “Specified Premises.” The facility is available to regular taxpayers and new registration applicants supplying hotel accommodation services, while certain categories such as composition taxpayers and cancelled registrations are excluded. Declarations can now be filed electronically within the prescribed timelines, with system-generated acknowledgement and email/SMS confirmation, and the option will continue unless opted out.

Lastly, GST revenue collections remained robust, with December 2025 collections registering a year-on-year growth of 6.1% to ₹1.74 lakh crore, reflecting steady compliance and continued stabilisation of the GST system.

Pankaj Kumar Singh Additional Secretary

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5ᵗʰ NATIONAL COORDINATION MEETING

The 5ᵗʰ National Coordination Meeting of the State and Central GST administrations was held on 13ᵗʰ December, 2025 at Bharat Mandapam, New Delhi, under the chairmanship of the Hon’ble Revenue Secretary. Senior officers from the CBIC, Central and State Tax Departments, DoR, GSTN, CEIB and the GST Council Secretariat participated in the meeting.

[Image omitted. See the official document.]

The meeting focused on advancing discussions on process-oriented reforms under GST, with emphasis on improving ease of compliance, enhancing consistency in implementation and making GST procedures more business-friendly. The deliberations reflected the shared objective of strengthening systems, reducing procedural complexities and promoting greater uniformity across jurisdictions in keeping with the spirit of cooperative federalism.

The meeting provided an opportunity for detailed deliberations and exchange of views on these issues and concluded on a note underscoring the importance of continued coordination and constructive engagement between the Centre and the States as GST processes evolve.

[Image omitted. See the official document.] [Image omitted. See the official document.]

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Notifications

• Notification No. 20/2025 – Central Tax dated 31.12.2025 issued to notify Central Goods and Services Tax (Fifth Amendment) Rules, 2025

The Central Government, vide this Notification, has notified the Central Goods and Services Tax (Fifth Amendment) Rules, 2025, to amend the Central Goods and Services Tax Rules, 2017. The notification inserts a new Rule 31D, providing a special valuation mechanism for specified goods whereby, notwithstanding anything contained elsewhere in the valuation rules, the value of supply shall be deemed to be the declared retail sale price (RSP) on such goods, reduced by the amount of applicable tax. The rule applies to pan masala, unmanufactured tobacco (other than tobacco leaves), cigars, cheroots, cigarillos and cigarettes, other manufactured tobacco and tobacco substitutes, and products containing tobacco or nicotine substitutes intended for inhalation without combustion, falling under tariff headings 2106, 2401, 2402, 2403 and 2404. The rule prescribes a formula for determining the tax component from the RSP and defines retail sale price as the maximum price declared on the package, inclusive of all taxes, duties, surcharge or cess. Where multiple RSPs are declared, the highest such price shall be adopted, and any increase in the declared RSP at any stage before, during or after supply shall be treated as the applicable RSP. Further, where different RSPs are declared for different areas, the respective area-wise RSP shall apply for valuation.

The amendment also inserts a new clause (f) in the first proviso to rule 86B, providing that registered persons other than manufacturers shall be exempt from the restrictions under rule 86B in respect of goods covered under rule 31D, where tax has already been paid by the supplier on the basis of retail sale price. The provisions of the notification shall come into force with effect from 1ˢᵗ February, 2026.

• Notification No. 19/2025 – Central Tax dated 31.12.2025 issued to notify supplies under section 15(5) of CGST Act for valuation based on Retail sale price (RSP)

The Central Government, vide this Notification, has amended Notification No. 49/2023–Central Tax, to prescribe valuation of supply of certain specified goods on the basis of the declared Retail Sale Price (RSP) under the Central Goods and Services Tax Act, 2017. Issued in exercise of the powers under sub-section (5) of section 15 of the CGST Act, on the recommendations of the GST Council, the notification provides that for goods such as pan masala, unmanufactured tobacco (other than tobacco leaves), cigars, cheroots, cigarillos and cigarettes, other manufactured tobacco and tobacco substitutes, as well as products containing tobacco or nicotine substitutes intended for inhalation without combustion which fall under tariff headings 2106, 2401, 2402, 2403 and 2404 of the Customs Tariff Act, 1975, the value of supply shall be determined with reference to the RSP declared on the package. The RSP has been defined as the maximum price declared on the package, inclusive of all taxes, duties, cess or surcharges, by whatever name called. Where more than one RSP is declared, the highest of such prices shall be deemed to be the retail sale price, and any alteration in the RSP at any stage before, during or after supply shall be taken as the applicable RSP for valuation. The notification further states that where different RSPs are declared for different areas, each such RSP shall apply for valuation in the respective area of sale.

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• Notification No. 19/2025 – Central Tax (Rate) dated 31.12.2025 issued to amend Notification 09/2025- Central Tax (Rate), to prescribe GST rates on tobacco products

The Central Government, in exercise of the powers conferred under sub-section (1) of section 9 and sub-section (5) of section 15 of the Central Goods and Services Tax Act, 2017 and on the recommendations of the Council, has amended Notification No. 9/2025–Central Tax (Rate) dated 17ᵗʰ September 2025. The amendment revises the rate structure applicable to specified tobacco and pan masala products with effect from 1ˢᵗ February, 2026. In Schedule II (9%), a new entry has been inserted to cover biris falling under tariff items 2403 19 21 and 2403 19 29. Further, in Schedule III (20%), new entries have been inserted to cover pan masala (2106 90 20); unmanufactured tobacco, tobacco refuse [other than tobacco leaves] (2401); cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes (2402); Other manufactured tobacco and manufactured tobacco substitutes; homogenised or reconstituted tobacco; tobacco extracts and essences [other than biris] (2403 (other than 2403 19 21, 2403 19 29)), and products containing tobacco or reconstituted tobacco/nicotine substitutes and intended for inhalation without combustion (2404 11 00 and 2404 19 00). Consequentially, Schedule VII (14%) and the entries relating thereto have been omitted.