CBIC Issues 8 GST Circulars on Registration, Appeals, ITC, ISD and Export Refunds on 26 October 2026

The Central Board of Indirect Taxes and Customs (CBIC), Ministry of Finance, has issued eight GST circulars dated 26 October 2026, clarifying various aspects of GST registration, tax proceedings, appeals, input tax credit (ITC), Input Service Distributor (ISD) requirements and export-related refunds.

The following table summarises the subject matter of each circular.

Key Highlights and Actionable under Each Circular

1. GST registration: The circular prescribes detailed guidelines for applying for GST registration, with the objective of reducing avoidable queries, delays and rejections.

1. Applicants must furnish accurate business details and appropriate proof of the principal place of business. Specific documentation requirements have been prescribed for owned, rented or leased, consent-based and co-working premises.

2. Applications are generally to be processed within seven working days where Aadhaar authentication is completed, and physical verification is not required. Other specified applications may require up to 30 days, subject to the prescribed procedure.

3. Applicants are generally required to respond to notices seeking additional information or documents within seven working days. The tax officer is required to approve or reject the application within seven working days of receiving the response, as applicable.

4. Bank account details must be furnished within 30 days of registration or before filing GSTR-1 or the Invoice Furnishing Facility (IFF), whichever is earlier.

Actionable – Businesses applying for new registrations or updating registration details should review their documentation and internal application process to minimise delays and rejection risks.

2.   Demand, adjudication and appeals – The circular provides procedural guidance for tax authorities issuing notices, determining tax liabilities and deciding appeals.

1. Notices proposing a tax demand or other adverse action should clearly state the allegations, supporting facts, evidence, applicable legal provisions and proposed liability. A preliminary intimation of the proposed tax liability may be issued before the formal notice wherever feasible.

2. Taxpayers’ submissions and evidence must be considered, with clear reasons recorded for each material issue. The tax, interest and penalty determined cannot exceed the amount specified in the notice, and a demand cannot be confirmed on grounds that were not stated in it.

3. Allegations of fraud, wilful misstatement or suppression of facts must be supported by relevant evidence. For FY 2024-25 onwards, the circular clarifies the application of Section 74A, including a common 42-month period for issuing notices and the need to separately explain the grounds and quantify the liability where both fraud-related and non-fraud-related allegations arise.

4. Rectification is limited to errors apparent on the face of an order and cannot be used to reconsider the merits of a decision. The circular also addresses appellate hearings, additional evidence and reasoned appellate orders. Appeals should, as far as possible, be heard and decided within one year, excluding the period during which proceedings remain stayed by a Court or Tribunal.

Actionable: Businesses facing GST notices or disputes should examine the specific allegations and supporting evidence, maintain complete records and ensure their replies address each issue raised. Demands and penalties should be reviewed against the notice and applicable legal requirements.

3.   Pre-deposit for GST appeals – The circular clarifies the amounts payable when challenging a GST demand and the procedure for obtaining refunds of these amounts.

1. The taxpayer must pay the full amount of the liability accepted as payable. For the first appeal, a pre-deposit of 10% of the disputed tax is required. For an appeal before the Appellate Tribunal, an additional 10% is calculated on the remaining disputed tax liability confirmed by the first appellate authority.

2. A taxpayer who succeeds before an appellate authority can claim a refund of the pre-deposit through FORM GST RFD-01 under the category “On account of order”. The appellate order need not expressly direct a refund.

3. Interest is calculated separately for pre-deposits paid at different appellate stages, based on the respective payment dates. A refund should not be denied merely because the department intends to appeal or has filed a further appeal, unless the favourable order has been stayed by the appropriate Tribunal or Court.

4. Where a matter is sent back for fresh adjudication, the circular clarifies the refund treatment. If part of the demand is upheld, the confirmed amount and applicable interest must be recovered or adjusted before the remaining pre-deposit is refunded.

Actionable: Businesses with pending appeals or favourable appellate orders should review pre-deposit calculations and identify eligible refund claims, including applicable interest.

4.  Input Service Distributor – The circular clarifies the registration and credit-distribution requirements for an ISD, which distributes ITC on input services received on behalf of the relevant GST registrations of a business.

1. Each relevant registered person receiving input service invoices for distribution to other distinct registrations must obtain ISD registration. Separate ISD registrations may be obtained for different business verticals or places of business within the same State or Union Territory, where applicable.

2. Credit must be distributed to the registration to which the relevant service is attributable. The ISD must ascertain the prima facie eligibility of credit before distribution and separately distribute eligible and ineligible credit through GSTR-6. The receiving registration remains responsible for checking eligibility and making the applicable reversals.

3. Where a regular registration pays GST under reverse charge on services whose credit is attributable to other registrations, the relevant credit must be transferred to the ISD through the prescribed mechanism for further distribution.

4. Documents issued under Rule 54(1A) to transfer credit to an ISD are credit-transfer documents rather than outward supplies. Their value is excluded from the relevant turnover calculations, and the transferred credit is excluded from the input tax credit considered for specified refund calculations.

5. Excess credit distributed contrary to the prescribed requirements may be recovered from recipients with interest. The ISD may also be liable to a penalty.

Actionable: Businesses with multiple GST registrations should review their ISD registration structure, centrally procured service invoices, monthly credit distribution and GSTR-6 reporting. Turnover and refund calculations should also be reassessed where credit is transferred through ISD-related documents.

5.  ITC for banking companies and financial institutions – The circular clarifies the 50% ITC mechanism available to eligible banking companies, financial institutions and non-banking financial companies (NBFCs) engaged in accepting deposits or extending loans and advances.

1. Eligible registrations may avail 50% of eligible ITC instead of calculating credit proportionately against taxable and exempt supplies. Where one eligible registration opts for this method, the other registrations of the same entity engaged in accepting deposits or extending loans and advances must also follow it. Registrations not engaged in these activities cannot opt for, and are not required to follow, this mechanism.

2. The relaxation from the 50% restriction applies only to qualifying supplies received from another registration having the same permanent account number (PAN) that has also opted for this ITC mechanism.

3. Credit that is permanently ineligible must be reversed in Table 4(B)(1) of GSTR-3B. Credit that is temporarily ineligible because prescribed conditions have not been met must be reversed in Table 4(B)(2) and may subsequently be reclaimed in Table 4(A)(5), subject to the applicable time limit, with disclosure in Table 4(D)(1).

4. Tax authorities are advised not to take an adverse view of differences in earlier-period reporting methods, provided the total ITC claimed is consistent with the principles clarified in the circular.

5. The circular prescribes an Invoice Management System (IMS) procedure for invoices relating to credit that is not yet eligible but may become eligible later. This procedure is linked to notification of the relevant amendment to the CGST Rules. Following notification, the procedure will also apply where IMS was used before the amendment.

Actionable: Eligible banks, financial institutions and NBFCs should review their ITC method across relevant registrations, inter-registration transactions and GSTR-3B reporting.

6.   ITC on demonstration vehicles  – The circular revises the treatment of demonstration vehicles purchased by authorised motor vehicle dealers operating under the dealer-agency model, where the manufacturer sells vehicles directly to customers and the dealer provides demonstration and test-drive facilities.

1. ITC on demonstration vehicles is not blocked merely because an authorised dealer operates under the dealer-agency model. The vehicles serve the purpose of facilitating the further supply of similar motor vehicles.

2. The earlier clarification that denied ITC to dealers under this model has been withdrawn.

Actionable: Authorised motor vehicle dealers should reassess ITC previously denied or reversed solely because of the dealer-agency arrangement and evaluate the resulting tax implications, subject to the other applicable eligibility conditions.

7.   Export proceeds and refunds – The circular clarifies how payments for exports may be received and when export proceeds are considered realised for GST purposes.

1. Export proceeds for services may be received in convertible foreign exchange or permitted repatriable Indian rupee accounts, including Special Non-Resident Rupee (SNRR) and INR Nostro accounts. Payments to stock brokers for services provided to overseas clients may also qualify when routed through permitted repatriable accounts, such as SNRR or Non-Resident External (NRE) accounts. Payments through Non-Resident Ordinary (NRO) accounts must be routed through repatriable accounts in accordance with RBI guidelines.

2. Export receivables may be set off against import payables where the arrangement complies with applicable Reserve Bank of India (RBI) directions. The circular refers to the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, effective from 1 October 2026.

3. Commission earned by an Indian reinsurance broker may be treated as received where it is settled by retaining the commission from the premium before the balance is remitted abroad, subject to applicable foreign exchange requirements.

4. Where export proceeds for goods are not received within the prescribed period, including any permitted extension, the corresponding refund may be recovered with applicable interest within 30 days after expiry of that period. Recovery should not be made to the extent the requirement to realise the proceeds has been written off, wholly or partly, by the Authorised Dealer Bank.

Actionable: Exporters, stock brokers and reinsurance brokers should review payment channels, set-off arrangements and supporting settlement records. Exporters who have claimed refunds should monitor realisation deadlines and assess potential recovery exposure where export proceeds remain outstanding.

8.    Retrospective omission of Rule 96(10)  – The circular clarifies the effect of removing the restriction that prevented certain exporters from claiming refunds of integrated GST paid on exports where specified exemptions or concessions had been availed on inputs.

1. Although the restriction was formally removed with effect from 8 October 2024, the circular clarifies that its omission applies retrospectively from 23 October 2017, following the Supreme Court’s judgment dated 6 August 2026 in Goodluck India Limited v. Union of India and connected matters.

2. Tax authorities have been advised to deal with proceedings that were pending when the rule was omitted in accordance with the Supreme Court judgment and the circular. The

same treatment applies to the corresponding omissions of Rules 89(4A) and 89(4B).

Actionable: Exporters with pending demands, refund claims or disputes involving these restrictions should reassess their cases in light of the retrospective clarification. The circular should not be assumed to automatically reopen every concluded proceeding.

Businesses should prioritise the actions relevant to their operations, particularly GST registration documentation, ISD credit distribution, ITC reporting, demonstration vehicle credit and export refund proceedings.

Source: CBIC