Detailed analysis of key CBIC circulars issued in 2025-26 — with plain-English interpretation, practical impact, and compliance actions for businesses.
Major CBIC circulars with practical interpretation and business impact
ITC on CSR expenses is NOT eligible under Section 17(5)(h) as it is not in furtherance of business. However, if the CSR activity results in a taxable supply (e.g., selling products made in CSR workshop), proportionate ITC is allowed.
Settles long-standing dispute — companies must reverse any ITC claimed on CSR expenses in FY 2024-25 annual returns
For B2B: Place of supply is location of recipient (billing address on GST registration). For B2C: Location of the recipient as per records. If SaaS provider and customer are in same state, CGST+SGST applies; else IGST.
Clarity for IT companies — eliminates disputes on inter-state vs intra-state classification for cloud/SaaS services
Taxpayers who already paid interest/penalty for FY 2017-20 can claim refund by filing Form GST RFD-01 with specific reason code 'AMNESTY-128A'. Refund to be processed within 60 days. No re-assessment or fresh demand can arise from the same period.
₹2,500+ Cr expected in refunds — taxpayers who overpaid during investigation/audit can recover amounts
Amounts received as compensation for breach of contract (Schedule II Para 5(e)) are NOT taxable if there is no underlying supply. Liquidated damages for delayed delivery = taxable supply of service (tolerance of an act). Penalty/fine by government = not a supply.
Construction/infra sector relief — delayed project penalties from government agencies not subject to GST
If recipient does not take any action (accept/reject/keep pending) on an invoice in IMS within the filing period, the invoice is DEEMED ACCEPTED and ITC auto-populates in GSTR-3B. Rejected invoices will NOT reflect in ITC. Pending invoices carry forward to next period.
Critical process change — businesses MUST actively review IMS before GSTR-3B filing; auto-acceptance creates irrecoverable ITC claims if ignored
Where Indian subsidiary pays salary to seconded employees and reimburses parent only the cost without any markup, it constitutes 'import of services' and is subject to GST under reverse charge. However, if payment is directly from parent's overseas payroll, no GST.
MNCs must restructure employee secondment agreements — many audit demands for FY 2020-24 may now stand validated
For supplies between related parties where open market value is not available, Rule 28 applies. CBIC clarifies that 'cost' includes all direct/indirect costs. The 15% deemed margin is a safe harbor — taxpayers may use higher margin if actual value is higher. Transfer pricing documentation acceptable as evidence.
Group companies can adopt transfer pricing reports for GST valuation — reduces litigation on inter-company transactions
From 01 Jul 2026, all login to GST portal requires: (1) Username + password, (2) OTP on registered mobile, (3) One additional factor — Aadhaar biometric OR authenticator app (Google/Microsoft Authenticator). DSC-based filing does not require MFA. API users need to implement OAuth 2.0 with MFA tokens.
All ERP/GSP integrations must update API authentication — 30-day grace period for technical migration
Key Point: ITC for FY can be claimed up to 30 Nov of next FY (not return filing date)
Key Point: TCS deducted at source, reflected in supplier GSTR-2B
Key Point: Registered tenant must pay GST under RCM; no threshold exemption for landlord
Key Point: Payment receipt in convertible forex within 1 year mandatory for zero-rating
Check if any new circular affects your ITC eligibility, taxability of transactions, or valuation. Update your accounting entries accordingly before filing GSTR-3B.
If you receive a demand notice or show-cause notice, check if a favorable circular exists. Tax officers are BOUND to follow circulars — cite the specific circular number in your reply.
Before annual audit (GSTR-9C), ensure all positions taken are supported by circulars. Document circular references for disputed items in your working papers.
Use circulars to settle GST disputes with vendors/customers. For example, the place of supply circular can resolve who bears the GST on inter-state SaaS contracts.
A GST notification has the force of law — it amends rules, changes rates, or brings new provisions into effect. A circular is an interpretive/clarificatory document issued by CBIC to provide guidance on how to apply existing law. Circulars do not create new law but clarify CBIC's position on ambiguous issues. While notifications are binding on taxpayers, circulars are binding on tax officers (they must follow the circular's interpretation). If a circular favors the taxpayer, they can rely on it.
GST circulars are binding on tax officers (they cannot take a position contrary to an existing circular), but technically not binding on courts or taxpayers. However, taxpayers can rely on favorable circulars as legitimate expectation. If a taxpayer follows a circular in good faith and the circular is later withdrawn/modified, the new position applies only prospectively. Courts have consistently held that circulars represent the government's interpretation and cannot be applied retrospectively against taxpayers.
IMS is a new feature on the GST portal (from 2026) where all supplier-uploaded invoices appear for recipient's action. Recipients must: (1) ACCEPT invoices to include them in GSTR-3B ITC, (2) REJECT invoices if the supply is disputed/incorrect, or (3) KEEP PENDING for future periods. If no action is taken, invoices are DEEMED ACCEPTED after the filing period. This replaces the old auto-population from GSTR-2B and gives recipients control over their ITC claims.
Section 128A (inserted by Finance Act 2024, notified in 2026) provides a one-time amnesty for taxpayers who received demand notices for FY 2017-18, 2018-19, and 2019-20. If the taxpayer pays the principal tax demand (without interest and penalty), the entire interest and penalty is waived. This covers demands under Section 73 (non-fraud cases). Taxpayers who already paid interest/penalty can claim refund via Form GST RFD-01 with code 'AMNESTY-128A'.
CBIC issues circulars as needed — typically 15-25 per year. They are usually issued: (1) After GST Council meetings to clarify rate changes; (2) When High Courts give conflicting decisions on the same issue; (3) When industry associations seek clarity on new provisions; (4) Before major due dates to provide procedural guidance. All circulars are published on cbic.gov.in and gst.gov.in within hours of issuance.
LaabamOne integrates every new CBIC circular into its compliance engine — automatically adjusting ITC rules, taxability checks, and filing logic.
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