GST Year-End Review FY 2025-26

Amendments + Council decisions + compliance changes + judicial developments + practitioner action items for FY 2025-26

Year-End Review FY 2025-26 | First Edition | May 2026

[Year-end review consolidating all major GST developments during FY 2025-26 — Acts, amendments, notifications, circulars, landmark judgments, GST Council meeting decisions, operative changes, practitioner planning + compliance reset for FY 2026-27]

PART A — FY 2025-26 SNAPSHOT — KEY DEVELOPMENTS

FY 2025-26 — Major GST Developments at a Glance

PART B — KEY AMENDMENTS OPERATIVE DURING FY 2025-26

B.1 Substantive Amendments Operational

B.2 GST Council 53rd Meeting (22.06.2024) — Key Decisions Implementation

• Insertion of s. 11A CGST + parallel IGST/UTGST/DGST — regularisation power for non-levy / short-levy due to common practice.
• ITC time-limit relaxation under s. 16(4) — extended window for FY 2017-18 to FY 2020-21 legacy claims.
• Amendments to s. 73, 74, 122, 132 — various procedural and substantive changes.
• Reduction in pre-deposit for appeals — facilitating taxpayer access to appellate framework.
• Roll-out of biometric Aadhaar authentication for registration — pan-India coverage.
• TDS / TCS rate alignment with revised framework.
• Various sector-specific clarifications — railways services, real-estate joint development agreements, sponsorship services, ESOP/ESPP cross-charges.
• Operationalisation through FY 2024-25 + FY 2025-26 notifications.

B.3 GST Council 54th Meeting (09.09.2024) — Key Decisions (operative through FY 2025-26)

• Online services rate clarifications — research grants, certain financial services adjustments.
• Insurance sector reforms discussion — Life + health insurance rationalisation framework discussions continuing.
• Real-estate framework refinements — joint development agreement clarifications.
• Compensation Cess post-31.03.2026 framework — continuing discussions.
• Various procedural simplifications.

B.4 GST Council Meetings Anticipated for FY 2025-26

Periodic Council meetings during FY 2025-26 expected to address: (a) post-31.03.2026 Compensation Cess framework decisions; (b) Insurance sector rate rationalisation; (c) Online education / EdTech clarifications; (d) GSTAT operationalisation framework; (e) Various ongoing sector-specific clarifications; (f) DGGI anti-evasion framework refinements; (g) Operational refinements based on emerging litigation.

PART C — JUDICIAL DEVELOPMENTS DURING FY 2025-26

C.1 Major Judicial Developments

Chief Commissioner of Central Goods and Service Tax v Safari Retreats Pvt Ltd — (2024) SCC OnLine SC 2966 [Supreme Court — 2-Judge Bench]

Brief Facts: Safari Retreats constructed a shopping mall and leased it out — output supply was taxable rental. It sought ITC on construction goods/services (cement, steel, works contract). Revenue invoked s. 17(5)(d) of the CGST Act to deny ITC on inputs/input services used in construction of immovable property other than plant or machinery 'on his own account'. Orissa HC read down s. 17(5)(d) for leasing-out cases; SC heard the appeal.

Issue: Whether s. 17(5)(d) bars ITC on construction inputs/services where the immovable property constructed is itself used to make taxable outward supplies (here, rental); and what is the scope of the 'plant or machinery' exclusion.

HELD: ITC permitted in a 'functionality test' framework. The Court held that whether a building qualifies as 'plant' within the 'plant or machinery' exclusion is a fact-specific functional inquiry — if the building itself is the means by which the registered person makes outward taxable supplies (e.g., a hotel, a mall, a warehouse), it can qualify as plant and ITC on its construction is admissible. Matter remitted for application of functionality test.

"Whether a particular building qualifies as a plant within the meaning of the expression 'plant or machinery' is a question of fact that has to be determined keeping in mind the business of the registered person and the role that building plays in that business."

Relevance: Critical reset on ITC architecture for real-estate / leasing / hospitality. Important for IGST place-of-supply (immovable property) disputes where ITC architecture interacts with location-of-supply rules under s. 12(3) of the IGST Act.

Safari Retreats (2024) functionality test continues to be operationalised through FY 2025-26 — practitioner reassessment of historical blocked construction ITC ongoing. Major SC ruling enabling ITC for buildings used to make taxable outward supplies (rental, hotel, mall, warehouse). Fact-specific functionality test application through subsequent jurisprudence + Department clarifications.

Union of India v Mohit Minerals Pvt Ltd — (2022) 10 SCC 700 [Supreme Court — 3-Judge Bench (Constitution Bench questions)]

Brief Facts: Importers of coal on CIF basis were held liable under Notification Nos. 8/2017-Integrated Tax (Rate) and 10/2017-Integrated Tax (Rate) to pay IGST on ocean freight component under reverse charge under s. 5(3)/(4) of the IGST Act. Importers challenged the levy as ultra vires the charging section and contended that IGST had already been paid on CIF value (which included freight) at the time of import under s. 3(7) of the Customs Tariff Act.

Issue: Whether IGST could be levied separately on the ocean freight component of CIF imports when the entire CIF value (inclusive of freight) had suffered IGST under s. 3(7) of the Customs Tariff Act; and whether GST Council recommendations are binding on the Union and States.

HELD: Levy struck down. The Court held that the impugned notification offended the principle of 'composite supply' under s. 8 of the CGST Act because ocean freight in CIF imports is part of the composite supply of imported goods and cannot be artificially severed. Further, the GST Council's recommendations are recommendatory, not binding, on the Union and States — both Parliament and State legislatures have simultaneous legislative power under Article 246A.

"The recommendations of the GST Council are not binding on the Union and the States. The recommendations only have a persuasive value. To regard them as binding would disrupt fiscal federalism, where both the Union and the States are conferred equal power to legislate on GST."

Relevance: Foundational authority on the IGST charging section, the limits of reverse-charge notifications under s. 5(3)/(4), and the constitutional architecture of the GST Council. Repeatedly cited in RCM, place-of-supply, and composite-supply disputes.

Mohit Minerals (2022) doctrine continues to be applied — Council recommendations persuasive not binding. Major doctrinal anchor for amendments + notification framework challenges.

Union of India v VKC Footsteps India Pvt Ltd — (2022) 2 SCC 603 [Supreme Court — 2-Judge Bench]

Brief Facts: Manufacturer-exporters with inverted duty structure (input GST > output GST) sought refund of accumulated input tax credit under s. 54(3) read with Rule 89(5) of the CGST Rules. Rule 89(5) permitted refund of unutilised ITC only on 'inputs' (goods), excluding 'input services'. Gujarat HC struck down the exclusion; Madras HC upheld it. SC heard the conflict.

Issue: Whether Rule 89(5) of the CGST Rules — by restricting inverted-duty refund to inputs (goods) and excluding input services — is ultra vires s. 54(3) of the CGST Act.

HELD: Rule 89(5) upheld. The Court held that s. 54(3) is enabling, not mandatory, and the legislative policy choice to confine inverted-duty refund to inputs (goods) is constitutionally permissible. The refund of unutilised ITC is not a constitutional right; it is a statutory concession that the legislature can shape and limit. The Court urged the GST Council to revisit the formula but did not strike down the rule.

"Refund of unutilised ITC is a statutory entitlement, not a constitutional right. The legislature in its wisdom may choose to grant the entitlement with such conditions and limitations as it thinks fit. We cannot rewrite the formula by judicial fiat."

Relevance: Definitive authority on inverted-duty refund mechanics, the policy/discretion distinction in refund jurisprudence, and the standard of review for delegated legislation under GST.

Union of India v Bharti Airtel Ltd — (2022) 4 SCC 328 [Supreme Court — 2-Judge Bench]

Brief Facts: Bharti Airtel claimed it had under-reported ITC in GSTR-3B for July-Sept 2017 (the early GST months when GSTR-2A was not operational) and sought rectification of GSTR-3B for those months to correct the under-claim. Delhi HC permitted rectification; Revenue appealed to SC.

Issue: Whether GSTR-3B for past periods can be rectified to correct an under-claim of ITC where the registered person's books would support the correction but GSTN does not allow retrospective edit.

HELD: Rectification not permitted. The Court held that the GST return-filing regime is self-assessed; the registered person is duty-bound to verify entitlements at the time of filing and cannot, after the fact, claim that GSTR-2A was not available. ITC is a statutory entitlement that must be claimed within the period prescribed under s. 16(4) and not through retrospective rectification.

"GST is a self-assessment regime. The registered person bears the burden of correctly computing and reporting tax liability at the time of filing the return. The unavailability of GSTR-2A does not absolve the assessee of this duty."

Relevance: Substance-over-form authority on self-assessment, the finality of GSTR-3B, and limits on retrospective rectification — critical for place-of-supply disputes where mis-classification may be alleged years later.

Union of India v Filco Trade Centre Pvt Ltd — (2022) SCC OnLine SC 1156 [Supreme Court — 2-Judge Bench]

Brief Facts: Multiple High Courts had directed nationwide reopening of the GSTN portal for filing/revising TRAN-1 / TRAN-2 by taxpayers who had missed the original window. SC consolidated the appeals and considered whether Article 142 could be invoked to grant procedural relief beyond the statutory transitional-credit window under s. 140 of the CGST Act.

Issue: Whether a vested transitional CENVAT/ITC credit can be defeated by procedural deadlines, and whether the SC can direct a nationwide one-time portal reopening under Article 142.

HELD: Portal reopened nationwide for a 2-month window (1 Oct to 30 Nov 2022, later extended). The Court held that transitional credit is a vested right that cannot be defeated by mere procedural lapses, and Article 142 may be invoked to do complete justice where the procedural architecture has failed thousands of taxpayers.

"Article 142 confers a plenary power on this Court to do complete justice. Where a procedural failure of the administrative architecture has caused widespread denial of substantive rights, this Court can direct a one-time corrective dispensation."

Relevance: Authority for the vested-right doctrine in transitional credit; for the use of Article 142 to correct portal/architecture failures; and as the procedural template for any future SC-supervised GSTN remedial scheme.

C.2 Pending / Ongoing Litigation Watch for FY 2025-26

• Microsoft Regional Sales Corp v UoI (Bombay HC) — pending larger bench reference on s. 13(8)(b) intermediary constitutional challenge. Critical for IT/ITES sector.
• Various HC challenges on Rule 86A blocking framework — procedural fairness disputes.
• Rule 86B 99% cap framework challenges — selected applicability disputes.
• ITC restriction (Rule 36(4) framework variations) — continued litigation.
• Detention + e-way bill disputes under s. 129 — multiple HC interventions.
• Composite vs mixed supply classification disputes — sector-specific.
• POS for online education + cross-border digital services — emerging disputes.
• OIDAR + non-taxable online recipient broadening — post FA 2023 implementation disputes.
• Compensation Cess scope challenges — sin goods + online gaming framework.
• Real-estate joint development agreement framework — multi-event GST treatment disputes.

PART D — KEY OPERATIVE NOTIFICATIONS DURING FY 2025-26

D.1 Major Operative Notifications

Notification No. 15/2024-Central Tax + parallel Delhi/UT/State notifications dated Effective 10.07.2024 — TCS rate reduction from 1% to 0.5%

Major change for e-commerce operators. Pre-10.07.2024 — TCS 1% combined; post — 0.5%. CGST 0.25% + State 0.25% intra-State; IGST 0.5% inter-State.

Various FY 2024-25 + FY 2025-26 CBIC notifications + circulars dated Continuous — Operationalisation of 53rd + 54th Council Meeting decisions

s. 11A regularisation framework + s. 16(4) ITC time-limit relaxation + various procedural simplifications.

DGST Amendment Act 2024 (Act 1 of 2024) + 2nd Amendment Act 2024 + 3rd Amendment Bill 2024 dated 2024-25 Delhi gazette — Delhi parallel implementation

Delhi Legislative Assembly amendments tracking CGST FA 2023 + FA 2024 + Council recommendations.

Online Gaming Compensation Cess + GST framework notifications dated Continuing through FY 2025-26 — 28% + 28% framework operational

Foreign gaming platforms register under s. 14 IGST. Indian platforms apply combined 56% effective rate on bet face value.

Safari Retreats functionality test — CBIC operational clarifications expected dated Anticipated FY 2025-26 — Construction ITC implementation framework

Following SC remand, Department clarifications + State-level implementation expected to guide practitioner application.

Compensation Cess post-31.03.2026 framework dated Council discussions continuing — Future of Compensation Cess

Post-31.03.2026 framework — whether continued, modified, or restructured. Major industry monitoring.

Biometric Aadhaar authentication for registration (pan-India) dated Phased rollout FY 2024-25 + FY 2025-26 — Registration framework upgrade

All new registrations require biometric Aadhaar authentication; rollout phased across States.

E-invoicing threshold continuations dated Continuing — E-invoicing for B2B above Rs. 5 cr annual turnover

E-invoicing mandatory for B2B supplies above Rs. 5 cr threshold via IRN generation under Rule 48.

PART E — COMPLIANCE CHANGES + ACTION ITEMS FY 2025-26

E.1 Critical Compliance Action Items for FY 2025-26

• For e-commerce operator clients, update TCS framework to 0.5% (post 10.07.2024) — review pre vs post TCS reconciliation.
• For clients with legacy FY 2017-18 to FY 2020-21 ITC claims, file under extended s. 16(4) time-limit window.
• For industry-wide non-levy scenarios, evaluate s. 11A regularisation framework applicability.
• For Delhi clients, monitor DGST 2nd + 3rd Amendment Acts 2024 operational implementation.
• For commercial leasing / mall / warehouse clients (Safari Retreats functionality test), reassess historical blocked construction ITC for refund / rectification.
• For OIDAR / foreign digital service supplier clients, comply with broader scope post FA 2023.
• For online gaming / casino clients, comply with 28% GST + 28% Cess on full face value framework.
• For real-estate clients, monitor joint development agreement clarifications + concessional rate framework continuation.
• For new registrations, ensure biometric Aadhaar authentication compliance.
• For B2B clients above Rs. 5 cr turnover, ensure e-invoicing compliance.
• For appeal-pending clients, monitor reduced pre-deposit framework + GSTAT operationalisation.
• For composition clients, file CMP-02 by 31 March for FY 2026-27.
• For LUT clients, renew Form RFD-11 by 1 April 2026.
• For annual return clients, file GSTR-9 + 9C for FY 2024-25 within extended deadline (typically 31 December 2025) + FY 2025-26 within 2026 deadline.
• For Compensation Cess post-31.03.2026 framework, monitor Council decisions.
• For DGGI anti-evasion exposure clients, build defence on Mohit Minerals + Bharti Airtel framework.
• For Microsoft Regional Sales pending outcome, IT/ITES intermediary clients should structure principal-to-principal contracts.
• For sectoral clients (real estate, e-commerce, FMCG, hospitality, etc.), apply sector-specific commentary framework.
• Periodic CBIC + Delhi gazette + GST Council notification review essential.

E.2 Sector-wise Action Items for FY 2025-26

E.3 Compliance Reset Checklist for FY 2026-27

PART F — PRACTITIONER PLANNING + ADVISORY THEMES

F.1 Strategic Practitioner Themes for FY 2025-26 + FY 2026-27

• Leverage 2024 amendment relief mechanisms — s. 11A regularisation + s. 16(4) ITC time-limit relaxation — for legacy disputes + industry-wide non-levy scenarios.
• Safari Retreats reassessment opportunity — major retrospective ITC reclaim for commercial leasing / mall / warehouse / hospitality entities.
• Microsoft Regional Sales outcome monitoring — IT/ITES sector intermediary classification.
• OIDAR / foreign digital service compliance — continuing scope expansion post FA 2023.
• Online gaming framework — sector-specific compliance challenges post 01.10.2023.
• GSTAT operationalisation — appellate framework progress through FY 2025-26 + FY 2026-27.
• Compensation Cess post-31.03.2026 framework — major policy decision pending.
• DGGI + State anti-evasion intensification — leverage layered defence framework (Mohit Minerals + Bharti Airtel + Mafatlal + Filco Trade + Maneka Gandhi).
• Council recommendation challenges — Mohit Minerals persuasive-not-binding doctrine for amendment framework.
• Cross-statute compliance integration — single GSTN framework + multi-Act amendment tracking.
• Sector-specific advisory — leverage 8-sector commentary framework.
• Litigation strategy — Delhi HC + Bombay HC + various HC particularly active forums; leverage favourable jurisprudence.
• Refund maximisation — VKC Footsteps + Mafatlal framework + Rule 89 operational optimisation.
• TCS reduction — major working-capital benefit for e-commerce sector.
• Aadhaar biometric authentication — registration framework compliance reset.

F.2 Practitioner Litigation Defence Themes

• Mohit Minerals (2022) — Council recommendations persuasive; foundational doctrine for amendment challenges.
• Bharti Airtel (2022) — Self-assessment finality; defence against retrospective reclassification.
• Safari Retreats (2024) — Construction ITC functionality test; major opportunity.
• VKC Footsteps (2022) — Refund as statutory entitlement.
• Filco Trade (2022) — Article 142 backstop for transitional + portal failures.
• Vatika Township (2015) — Prospective operation presumption.
• Mafatlal (1997) — Unjust enrichment for refund disputes.
• Maneka Gandhi (1978) — Procedural fairness foundation.
• AIFTP (2007) — Constitutional foundation.
• Skill Lotto (2021) — Legislative latitude.
• L&T (2014) — Works contract framework.
• Imagic Creative (2008) — Composite supply principal-supply test.
• GVK Industries (2011) — Extraterritorial nexus.
• Microsoft Regional Sales (Bombay HC 2024 pending) — Monitor for IT/ITES.

F.3 Sector + Practice Area Outlook for FY 2026-27

• GSTAT operationalisation expected — appeals framework will gain traction.
• Continued operationalisation of FA 2024 + DGST 2024 amendments.
• Compensation Cess post-31.03.2026 framework — major policy outcome anticipated.
• Insurance sector rate rationalisation — Council-level decisions anticipated.
• Continued e-commerce + OIDAR framework refinements.
• Continued DGGI anti-evasion intensification.
• Safari Retreats application maturing — Department clarifications expected.
• Microsoft Regional Sales outcome — IT/ITES intermediary clarity.
• Periodic GST Council meetings driving framework refinements.
• Continued Delhi HC + Bombay HC + various HC activity.
• Cross-border + OIDAR + online gaming continued compliance complexity.
• Multi-Act amendment timeline tracking continued criticality.

PART G — CONSOLIDATED FY 2025-26 SUMMARY

G.1 Summary Snapshot

FY 2025-26 has been characterised by continued implementation of FA 2024 + GST Council 53rd Meeting decisions, TCS rate reduction effective 10.07.2024, continued Safari Retreats jurisprudence application, OIDAR framework continued broadening post FA 2023, online gaming framework operational compliance, DGST 2nd + 3rd Amendment Acts 2024 implementation, GSTAT progress, and continued DGGI anti-evasion intensification.

The substantive GST framework — CGST + IGST + UTGST + DGST + Compensation Cess — has matured significantly since 2017. The five Acts operate as a coordinated framework with extensive cross-referencing + GSTN integration. Practitioner advisory increasingly requires multi-Act + multi-sector + cross-statute analysis.

For FY 2026-27, expected developments include GSTAT operationalisation, Compensation Cess post-31.03.2026 framework decisions, insurance sector rationalisation, continued DGGI activity, and continued operationalisation of amendments-in-progress.

G.2 Top-Level Practitioner Imperatives for FY 2026-27

• Leverage 2024 amendment relief mechanisms (s. 11A + s. 16(4)) for legacy + industry-wide scenarios.
• Safari Retreats functionality test reassessment opportunity — major retrospective ITC reclaim.
• Update TCS framework for e-commerce clients to 0.5% (effective 10.07.2024).
• Monitor GSTAT operationalisation + leverage reduced pre-deposit framework.
• OIDAR + online gaming continued compliance.
• DGST-specific amendments operationalisation.
• Cross-statute compliance integration via single GSTN framework.
• Sector-specific advisory leveraging 8-sector commentary framework.
• Litigation strategy leveraging layered defence + favourable jurisprudence.
• Periodic CBIC + Delhi gazette + Council notification review essential.
• Anticipate Council 55th-56th Meeting decisions for FY 2026-27.
• Build comprehensive multi-Act compliance + advisory practice for clients.

CROSS-REFERENCES

• All 5 GST Acts — CGST + IGST + UTGST + DGST + Compensation Cess + Rules + Amendment Acts.
• Cross-statute Integration Workbook — single multi-Act reference.
• Worked Examples Supplement — concrete scenarios.
• Sector-Specific Commentary — 8-sector framework.
• Compliance Calendar + Forms Catalogue — operational compliance reference.
• All operative CBIC + Delhi gazette + State gazette notifications + circulars.
• GST Council recommendations + meeting decisions.
• FA 2024 + DGST 2nd + 3rd Amendment Acts 2024 + various amendments.
• Notification 15/2024-Central Tax — TCS rate reduction.
• Compensation Cess Amendment Act 2022 — extended cess collection.
• Mohit Minerals (2022) 10 SCC 700 — foundational.
• VKC Footsteps (2022) 2 SCC 603.
• Safari Retreats (2024) SCC OnLine SC 2966.
• Bharti Airtel (2022) 4 SCC 328.
• Filco Trade (2022).
• Mafatlal (1997) 5 SCC 536.
• Vatika Township (2015) 1 SCC 1.
• AIFTP (2007) 7 SCC 527.
• Microsoft Regional Sales (Bombay HC 2024 pending) — intermediary.
• Constitution Articles 246A, 269A, 270, 279A, 239AA, 286.
• GST Council 53rd Meeting (22.06.2024) + 54th Meeting (09.09.2024).
• GSTN portal — single compliance interface.