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Pursuant to the recommendations of the 57th GST Council Meeting, the Government has issued the following Notifications:
Notification No. 06/2026-Integrated Tax (Rate) (‘Amendment Notification’) amending Notification No. 8/2017-Integrated Tax (Rate) (‘rate notification’). Similar amendments have also been carried out under Notification No. 06/2026-Central Tax (Rate) in respect of the corresponding rate entries applicable under CGST regime.
Notification No. 07/2026-Integrated Tax (Rate) amending Notification No. 09/2017- Integrated Tax (Rate) dated 28 June 2017 (‘Exemption Notification’).
Notification No. 09/2026-Integrated Tax (Rate) amending Notification No. 14/2017 –Integrated Tax (Rate) dated 28 July 2017 (‘E-commerce operator Notification’).
Notification No. 10/2026-Integrated Tax (Rate): Special procedure for payment of tax under Toll-Operate-Transfer Model
The amendments brought in by the above notifications are discussed below:
1. Allowing restricted availment of ITC on same-line-of-business services for supplies attracting GST at 5%
(i) Under the rate notification, services such as hotel accommodation, restaurant services, outdoor catering services were taxable at a concessional rate of 5%, subject to the condition that the supplier did not avail input tax credit (‘ITC’) on goods and services used in supplying such services.
(ii) The Government vide the Amendment Notification has relaxed the above condition and permitted availment of ITC to the extent of input services procured from another supplier in the same line of business.
(iii) However, where another supplier in same line of business has charged GST on such input services at a rate exceeding 5%, ITC in the hands of the recipient would be available only to the extent of 5% on such input services.
LKS comments
The amendment addresses a long-standing concern of service providers operating through subcontracting and aggregation models, who were unable to avail ITC on services procured from another supplier in the same line of business while supplying the output service at 5%.
The amendment seeks to address the cascading of taxes arising in same-line-of-business procurements and extends a benefit that was already available in sectors such as passenger transportation and renting of motor vehicles to other services taxable at 5%.
2. Insertion of a new entry providing an option to discharge GST at 5% on passenger transport using electric vehicles and vehicle rental services using electric vehicles
(i) The Amendment Notification has inserted new entries under Serial Nos. 8 and 10 of rate notification providing an option to discharge GST at 5%, subject to conditions, in respect of:
transportation of passengers by electrically operated vehicles where the cost of battery charging is included in the consideration charged from the recipient;
renting of electrically operated vehicles designed to carry passengers where the cost of battery charging is included in the consideration charged from the recipient; and
renting of electrically operated vehicles used for transportation of goods where the cost of battery charging is included in the consideration charged from the recipient.
(ii) Further, the Amendment Notification has inserted a definition for ‘electrically operated vehicle’ to mean a vehicle which runs solely on electrical energy derived from an external source or from one or more electrical batteries fitted to such vehicle, and includes e-bicycles.
(iii) ITC on goods and services used for supplying the aforesaid services would not be available, except for services procured in the same line of business. Further, where GST on such input services is charged at a rate exceeding 5%, ITC would be available only to the extent of tax payable at the rate of 5% on such services.
LKS comments
The amendment implements the recommendation of the GST Council to provide a concessional GST rate option for passenger transport through electric vehicles and rental services supplied through electric vehicles, thereby aligning the tax treatment of such services with the Government's broader objective of promoting electric mobility.
The amendment remove ambiguity under the previously existing rate entries under Sl. No. 8 and 10, which referred to inclusion of the ‘cost of fuel’ in the consideration charged. The insertion of specific entries for electrically operated vehicles clarifies that the concessional GST rate would also be available in respect of eligible electric vehicles-based transportation and rental services.
Service providers may evaluate the impact of the corresponding restriction on ITC before opting for the concessional 5% rate.
3. Rationalization of GST rate on delivery services through E-commerce operator
(i) Amendment Notification has substituted Entry 12(iii) of rate notification, to prescribe a GST rate of 5% for the following delivery services:
Delivery services supplied through an electronic commerce operator, where the person supplying such services is not liable for registration under Section 22(1) of the CGST Act; and
Delivery services in relation to goods supplied through an electronic commerce operator.
(ii) The concessional rate is subject to the condition that ITC on goods and services used in supplying such delivery services is not availed.
(iii) The Amendment Notification, in line with the introduction of a separate GST entry for delivery services supplied through e-commerce platforms, has amended the definition of ‘goods transport agency’ under clause (xxxx) under para 5 of the rate notification to remove the exclusion relating to electronic commerce operators. Concurrent amendment has also been made in the definition of goods transport agency defined in para 2(ze) of the exemption notification.
(iv) Entry 19 (Heading 9965) of the Exemption Notification which exempts services by way of transportation of goods by (i) road except goods transport agency and courier agency and (ii) inland waterways, has been amended. The explanation which provides exclusion to local delivery services provided by or through an Electronic Commerce Operator (‘ECO’) has been omitted.
(v) Sl. No. 22A (Heading 9965 or Heading 9967) of the Exemption Notification exempts services provided by a goods transport agency to an unregistered person, including an unregistered casual taxable person. The Explanation has been inserted which provides that the entry will not apply to services provided by a goods transport agency in relation to goods, where such goods are supplied through an electronic commerce operator.
(vi) The amendments shall come into force with effect from 1 November 2026.
LKS comments
The amendment has been introduced in line with the 57th GST Council's broader proposal to create a separate GST framework for delivery services supplied through electronic commerce operators. The said entry provides a specific GST entry for delivery services supplied through e-commerce platforms, as against the earlier generic entry relating to local delivery services.
The amendment is expected to provide greater clarity on the tax treatment of such services and to align the notification with the evolving e-commerce delivery business model.
The amendment in definition of ‘goods transport agency’ is consequential to the introduction of a separate GST entry for delivery services supplied through e-commerce platforms and accordingly removes the exclusion relating to electronic commerce operators providing of facilitating local delivery services from the definition of ‘goods transport agency’.
4. Liability of payment of GST by E-commerce operator with respect to delivery services
(i) Clause (v) of the E-commerce Operator Notification has been substituted to make E-commerce operator liable to make payment of GST with respect to delivery services, other than postal and courier services, if delivery partner is not liable to be registered under GST law.
(ii) The entry covers delivery services, other than postal and courier services, except where the person supplying such services through electronic commerce operator is liable to obtain GST registration.
(iii) In accordance with the amendments made to the rate notification, ECO will be liable to pay tax at the rate of 5% without ITC.
(iv) The amendments shall come into force with effect from 1 November 2026.
LKS Comments
The amendment has expanded the scope from mere ‘local deliveries’ to all delivery services other than postal and courier services, routed through E-commerce operator.
The amendment will shift the compliance and tax payment responsibility to the E-commerce operators. This will require E-commerce operator to re-evaluate and track GST registration status of each delivery service provider. Accordingly, E-commerce operator would be required to differentiate the GST treatment for registered delivery service providers and unregistered delivery service providers.
5. Other amendments
(i) The Amendment Notification has omitted para 3 of rate notification, which prescribed the manner of determination of value of supply in case of lottery run by the State Government and lottery authorised by the State Government.
6. Various services have been exempted under Exemption Notification
(i) Import of services in India by an establishment of a foreign shipping company from its related person or any of its other establishments outside India, when made without consideration
(ii) Transport of passengers, with or without accompanied belongings, by air, in a helicopter on seat share basis, embarking from or terminating in an airport including a helipad located in the state of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura or at Bagdogra located in West Bengal.
(iii) Services by Seamen's Provident Fund Organization to persons governed by the Seamen's Provident Fund Act, 1966.
(iv) Services by way of grant of exclusive right of way or access, license and authority to demand, collect and appropriate toll fee by the Central Government, State Government, Union Territory, Local Authority, Governmental Authority or Government Entity.
(v) Services by way of curing of coffee supplied to coffee cultivators.
(vi) Services by way of storage or warehousing of cereals, pulses, fruits, vegetables, and seeds meant for sowing.
LKS comments
The exemption to shipping company is with an intention to bring foreign shipping line in par with international airlines which have been granted an identical exemption.
Transportation by chartered helicopter embarking from or terminating in an airport including a helipad located at specified regions will continue to attract GST. The exemption is being extended only to passenger transportation by helicopter on a seat-sharing basis which is distinct from chartered helicopter services.
The exemption on the transaction between concessionaire and general public for providing access to a road or a bridge on payment of toll charges was already available. The exemption has now been extended to the services provided by the Government (NHAI) by way of grant of exclusive right of way, access or license to demand and collect tolls to a road developer/ concessionaire in exchange for upfront/ periodic fees.
7. GST on operation and maintenance services provided by concessionaire under Toll-Operate-Transfer Model
(i) VideNotification No. 10/2026-Integrated Tax (Rate) dated 27 October 2026, the Government has notified special procedure to be followed by Concessionaires supplying operation and maintenance services (‘O&M services’) to the concessioning authority under the Toll-Operate-Transfer model, during the concession period.
(ii) The notification has provided the following:
* Person liable to pay IGST: Concessionaire supplying O&M services to the concessioning authority under the Toll-Operate-Transfer model, during the concession period.
*Amount on which tax to be paid: IGST will be payable on the amount actually charged or debited from the Escrow Account, maintained in accordance with the concession agreement, towards operation and maintenance expenditure as incurred by the concessionaire.
*Time of supply: The liability to pay tax will arise in a tax period in which the operation and maintenance expenditure is charged or debited from the Escrow Account.
(iii) The notification shall come into force with effect from 1 November 2026.
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