Global VAT & Indirect Tax News

The article explains that under current GST scrutiny, the eligibility of Input Tax Credit (ITC) hinges on a consistent documentation trail rather than just invoices. Chartered accountant Nitin Kaushik outlines the types of records—purchase orders, GST invoices with e‑way bills, GRNs, bank statements, and GSTR filings—that authorities examine. He stresses that due diligence and alignment of all records can protect bona fide buyers from penalties.

The Internet and Mobile Association of India (IAMAI) has urged the Indian government to reassess the 5% GST applied to ride‑hailing services, arguing it harms driver income and consumer affordability. IAMAI calls for exemptions for SaaS‑based mobility services and highlights confusion from contradictory state rulings. The association seeks dialogue with the GST Council and Finance Ministry to create a more sustainable framework for the sector.

India’s GST law imposes a 5% tax on ride‑hailing services, but the SaaS model used by aggregators creates ambiguity under Section 9(5) of the CGST Act. IAMAI has urged a review of the tax’s applicability, while Karnataka has exempted subscription‑based platforms such as Namma Yatri. The dispute raises uncertainty for aggregators, potentially leading to unexpected liabilities and affecting driver earnings and consumer affordability.

India's GST Council has granted an exemption on individual life and health insurance premiums, removing the 18% GST. The decision, announced in a written reply on 5 February 2026, covers all individual policies including family floater plans. IRDAI confirmed that insurers have passed the benefit to policyholders without raising premiums.

Experts at a CESS seminar in Hyderabad called for a balanced approach to India’s GST 2.0 rollout, emphasizing the need to simplify compliance while protecting revenue. They highlighted a proposed two‑slab rate structure of 5% and 18%, reforms to address inverted duty structures in textiles and fertilizers, and concerns over misuse of the three‑day registration approval window. The Trust‑First philosophy notes that 95% of taxpayers operate without intrusive scrutiny.

Experts and tax officials at an ICSSR‑sponsored seminar in Hyderabad called for a balanced approach to India’s upcoming GST 2.0 rollout, highlighting the need to simplify rates while protecting revenue. They warned against the misuse of the three‑day registration approval window and the inverted duty structure in sectors such as textiles and fertilizers.

The Bombay High Court ruled that a minimum three‑month gap must exist between a Section 73(2) show‑cause notice and the final order under Section 73(10) in GST proceedings. Orders passed earlier, such as the two‑and‑a‑half‑month order in the A.M. Marketplaces case, were quashed. The decision underscores procedural fairness and the need for adequate time for taxpayers to respond.

The article discusses the completion of GST 2.0 in India, the removal of the GST compensation cess, and the introduction of new excise rates on demerit goods such as cigarettes. It highlights how the excise notification could trigger a tax shock, affecting tobacco growers, small retailers, and the broader economy. Monthly GST collections in late 2025 remained robust, exceeding Rs 1.7–1.9 lakh crore.

The article argues that India’s 2026 budget should overhaul the GST structure, financing options, and fleet economics to accelerate electric vehicle adoption. It proposes reducing GST on batteries and charging services to 5%, reclassifying battery swapping as an energy service, extending vehicle life norms, and providing green credit and toll waivers to lower ownership costs and support large fleet conversions.

The article explains that the GST Council’s exemption of individual health and term insurance policies effective 22 September 2025 did not lower premiums because insurers lost the ability to claim input tax credit on operating expenses, making the exemption cost‑neutral. It outlines insurers’ options—absorbing costs, raising premiums, or recalibrating commissions—and calls for structural fixes such as partial ITC restoration and concessional GST rates.

The 2025 GST exemption for individual health and term insurance in India has not led to significant premium reductions because insurers cannot claim input tax credit on operating expenses. The article explains how insurers absorb costs or adjust premiums, and outlines industry demands for partial ITC restoration and other reforms.

The Supreme Court of India clarified that a 'part' of machinery must functionally participate in the machine’s operation, while structures that merely support do not qualify. It reaffirmed that tariff classification is a rule‑based exercise grounded in the Customs Tariff and HSN, and that end‑use is not determinative unless the tariff allows it. The ruling also confirmed that HSN explanatory notes carry binding interpretive value.

The Madras High Court has ruled that input tax credit (ITC) claimed by dealers is provisional until they provide proof of the underlying sale transaction. The court directed the dealer to submit the required documentation, emphasizing that ITC cannot be confirmed without supporting evidence. This decision underscores the importance of maintaining proper records for GST compliance.

The article presents the GST compliance calendar for January 2026, detailing key due dates for monthly returns, payments, and the annual return. It serves as a reference for businesses to plan filing and payment schedules. The calendar is hosted by IRISGST and includes an interactive selector for other months and years.

India rolled out Next Generation GST Reform (GST 2.0) in September 2025, introducing a simplified two-slab structure of 5% and 18% to replace the previous four-slab system, easing compliance for MSMEs.