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Core Purpose

The Ministry of Finance amends a previous notification and the Central Goods and Services Tax Rules, 2017, to mandate retail sale price-based valuation for specific tobacco and pan masala products for Central Goods and Services Tax.

Detailed Summary

The Ministry of Finance (Department of Revenue), Central Board of Indirect Taxes and Customs, issued two notifications on December 31, 2025, impacting Central Goods and Services Tax. Notification No. 19/2025-Central Tax (G.S.R. 949(E)) amends Notification No. 49/2023-Central Tax, dated September 29, 2023 (G.S.R. 705(E)), by inserting clause (iv) under sub-section (5) of section 15 of the Central Goods and Services Tax Act, 2017 (12 of 2017). This clause specifies that the supply of pan masala and various tobacco products (including unmanufactured tobacco, cigars, cigarettes, other manufactured tobacco/substitutes, and inhalation products containing tobacco/nicotine substitutes, falling under specific Customs Tariff Act, 1975 tariff items 2106 90 20, 2401, 2402, 2403, 2404 11 00, 2404 19 00) bearing a declared retail sale price will be subject to new valuation rules, with "retail sale price" defined for various scenarios. Concurrently, Notification No. 20/2025-Central Tax (G.S.R. 950(E)) introduces the Central Goods and Services Tax (Fifth Amendment) Rules, 2025, under section 164 of the Central Goods and Services Tax Act, 2017. These rules insert a new rule 31D into the Central Goods and Services Tax Rules, 2017, mandating that the value of supply for the aforementioned goods shall be the declared retail sale price less the applicable tax, providing a specific calculation formula. Additionally, rule 86B is amended to exempt certain registered persons (non-manufacturers) from its provisions for goods covered under new rule 31D if tax is paid on a retail sale price basis. Both notifications come into force on February 1, 2026, and were signed by Kriti Pandey, Under Secretary.

Full Text

REGD. No. D. L.-33004/99 The Gazette of India CG-DL-E-31122025-268975 EXTRAORDINARY PART II—Section 3—Sub-section (i) PUBLISHED BY AUTHORITY NEW DELHI, WEDNESDAY, DECEMBER 31, 2025/PAUSHA 10, 1947 MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS) NOTIFICATION New Delhi, the 31st December, 2025 No. 19/2025 – Central Tax G.S.R. 949(E).— In exercise of the powers conferred by sub-section (5) of section 15 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Government, on the recommendations of the Council, hereby makes the following amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 49/2023-Central Tax, dated the 29th September, 2023 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 705(E), dated the 29th September, 2023, namely:— In the said notification, after clause (iii), the following clause shall be inserted, namely:— "(iv) supply of the following goods bearing the description specified in column (3), falling under the corresponding Chapter/heading/ sub-heading/ tariff item specified in column (2), of the Table below, on which retail sale price is declared : - TABLE S. No. | Chapter / Heading / | Description of Goods | Sub-heading / Tariff | | item | (1) | (2) | (3) -------+------------------------+-------------------------------------------------------------------------------------------------- 1. | 2106 90 20 | Pan masala 2. | 2401 | Unmanufactured tobacco; tobacco refuse [other than tobacco leaves] 3. | 2402 | Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes 4. | 2403 | Other manufactured tobacco and manufactured tobacco substitutes; "homogenised” or “reconstituted" tobacco; tobacco extracts and essences (other than biris) 5. | 2404 11 00 | Products containing tobacco or reconstituted tobacco and intended for inhalation without combustion 6. | 2404 19 00 | Products containing tobacco or nicotine substitutes and intended for inhalation without combustion Explanation. - For the purposes of this clause,— (a). “retail sale price” means the maximum price declared on goods at which such goods in packaged form may be sold to the ultimate consumer and includes all taxes, duties, surcharge or cess, by whatever name called; (b). where on the package of any specified goods more than one retail sale price is declared, the maximum of such retail sale price shall be deemed to be the retail sale price; (c). where the retail sale price declared on packages of any specified goods is altered to increase the retail sale price at any stage before, during, or after the supply, such altered retail sale price shall be deemed to be the retail sale price; (d). where different retail sale prices are declared on different packages for the sale of any specified goods above in packaged form in different areas, each such retail sale price shall be the retail sale price for the purposes of valuation of the specified goods intended to be sold in the area to which the retail sale price relates. (e). “tariff item”, “heading”, “sub-heading” and “Chapter” shall mean respectively a tariff item, heading, sub-heading, and Chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975); the rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this clause." 2. This notification shall come into force on the 1st day of February 2026. [F. No. CBIC-20001/2/2025-GST] KRITI PANDEY, Under Secy. Note: The principal notification was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide notification No. 49/2023-Central Tax, dated the 29th September, 2023, published vide number G.S.R. 705(E), dated the 29th September, 2023. NOTIFICATION New Delhi, the 31st December, 2025 No. 20/2025-Central Tax G.S.R. 950(E).— In exercise of the powers conferred by section 164 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby makes the following rules further to amend the Central Goods and Services Tax Rules, 2017, namely:— 1. Short title and commencement. (1) These rules may be called as the Central Goods and Services Tax (Fifth Amendment) Rules, 2025. (2) They shall come into force from 1st day of February, 2026. 2. In the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as the said rules), after rule 31C, the following rule shall be inserted, namely:— "31D. Value of supply of goods on basis of retail sale price. -(1) Notwithstanding anything contained in the provisions of this Chapter, the value of supply of goods bearing the description specified in column (3), falling under the corresponding Chapter/heading/ sub-heading/ tariff item specified in column (2), of the Table below, shall be deemed to be the retail sale price declared on such goods, less the amount of tax as applicable, namely:- TABLE S. No. | Chapter / Heading / | Description of Goods | Sub-heading / Tariff | | item | (1) | (2) | (3) -------+------------------------+-------------------------------------------------------------------------------------------------- 1. | 2106 90 20 | Pan masala 2. | 2401 | Unmanufactured tobacco; tobacco refuse [other than tobacco leaves] 3. | 2402 | Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes 4. | 2403 | Other manufactured tobacco and manufactured tobacco substitutes; "homogenised” or “reconstituted" tobacco; tobacco extracts and essences (other than biris) 5. | 2404 11 00 | Products containing tobacco or reconstituted tobacco and intended for inhalation without combustion 6. | 2404 19 00 | Products containing tobacco or nicotine substitutes and intended for inhalation without combustion (2) The amount of applicable tax referred to in sub-rule (1) shall be determined in the following manner, namely: Tax amount = (Retail sale price X tax rate in % of applicable taxes) / (100+ sum of applicable tax rate). Explanation. - For the purposes of this rule, (a) "applicable tax" means IGST or CGST or SGST or UTGST as the case may be. (b) "retail sale price" means the maximum price declared on goods at which such goods in packaged form may be sold to the ultimate consumer and includes all taxes, duties, surcharge or cess by whatever name called; (c) where on the package of any specified goods more than one retail sale price is declared, the maximum of such retail sale price shall be deemed to be the retail sale price; (d) where the retail sale price declared on packages of any specified goods is altered to increase the retail sale price at any stage before, during, or after the supply, such altered retail sale price shall be deemed to be the retail sale price; (e) where different retail sale prices are declared on different packages for the sale of any specified goods above in packaged form in different areas, each such retail sale price shall be the retail sale price for the purposes of valuation of the specified goods intended to be sold in the area to which the retail sale price relates.". 3. In the said rules, in rule 86B, in the first proviso, after clause (e), the following clause shall be inserted, namely:- "(f) the registered person other than a manufacturer shall be exempted from the provisions of this rule only in respect of goods specified under rule 31D, on which the tax has been paid by the supplier on the basis of retail sale price:". [F. No. CBIC-20001/2/2025-GST] KRITI PANDEY, Under Secy. Note: The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide notification No. 3/2017-Central Tax, dated the 19th June, 2017, published vide number G.S.R. 610(E), dated the 19th June, 2017 and were last amended, vide notification No. 18/2025– Central Tax, dated the 31st October, 2025, vide number G.S.R. 805(E), dated the 31st October, 2025. Uploaded by Dte. of Printing at Government of India Press, Ring Road, Mayapuri, New Delhi-110064 and Published by the Controller of Publications, Delhi-110054.

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