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.
In 2025, as part of the completion of GST 2.0.
They consistently exceeded Rs 1.7–1.9 lakh crore.
Cigarettes, especially those made from Flue‑Cured Virginia tobacco.
FCV tobacco growers in Andhra Pradesh and Karnataka, small retailers, and cigarette manufacturers.
It could push legal cigarettes beyond affordability, increasing illicit trade and eroding market capitalisation of cigarette manufacturers.
Get VAT and indirect tax news delivered to your inbox twice a week.
No spam. Unsubscribe anytime.
BW Auto World · about 11 hours ago
The Supreme Court of India has admitted a petition by the Federation of Automobile Dealers Associations (FADA) concerning more than Rs 2,500 crore in blocked compensation cess credits that became unusable after the implementation of GST 2.0. The court has scheduled the next hearing for March 25 2026 and is considering a transitional mechanism to allow these credits to be offset against other GST liabilities. The case could set a precedent for handling legacy tax credits during indirect tax reforms.
The Hindu · 14 days ago
India’s GST rationalisation introduced a two‑tiered rate structure of 5% and 18% in September 2025, boosting domestic consumption. However, February 2026 saw a sharp rise in import IGST collections—up 17% YoY—driven by a weaker rupee and higher import costs, which may erode the price relief from the new rates.
Storyboard18 · 19 days ago
The Supreme Court of India ruled that Rooh Afza is a fruit drink under the Uttar Pradesh Value Added Tax Act, removing it from the residual category that had subjected it to a 12.5% VAT rate. The decision places the product under Entry 103 of Schedule II Part A, which historically attracted a 4% VAT rate for the assessment period 2008‑2012. The ruling emphasizes that tax classification must be based on statutory language, not food safety definitions.
BusinessToday · 29 days ago
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.
DevDiscourse · about 1 month ago
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.
Whalesbook · about 1 month ago
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.
