Indirect Tax Updates

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Indirect Tax Updates

IDT Developments and Associated Procedures

Finance Act 2026 Assented by the Hon’ble President of India

The Finance Bill 2026 was initially presented by the Hon’ble Finance Minister Nirmala Sitharaman on 1 February 2026, had been granted assent by the President of India on 30 March 2026 without any significant changes or amendments from Indirect Tax perspective.

Malaya Rub-Tech Industries 2026 (2) TMI 654 – Tripura High Court

In the present case, the petitioner, a registered dealer engaged in manufacturing activities, had availed Input Tax Credit (ITC) on purchases made from registered suppliers. During assessment proceedings, the department denied the ITC on the ground that the supplier had failed to deposit the tax collected from the petitioner into the Government treasury. The department invoked Section 16(2)(c) of the CGST Act, 2017 which provides that a registered person shall be entitled to ITC only if the tax charged on the supply has been actually paid to the Government. It was argued that the purchaser had no control over the seller’s subsequent compliance with tax payment obligations, and assessment order did not record any finding of fraud, collusion, or involvement of the purchaser in tax evasion.

The Hon’ble Tripura HC held that denying ITC to a bona fide purchaser solely on the basis that tax has not been paid by the supplier undermines the very object and purpose of the CGST Act, 2017 and this restriction imposes undue burden on the purchasing dealer. Accordingly, the Hon’ble High Court has read down the provisions of Section 16(2)(c) until CBIC finds a practical solution to ITC availability for bona fide purchasers.

JVS Agencies 2026 (2) TMI 1322 – Madras High Court

In the present case, the petitioner challenged the recovery proceedings initiated by the GST authorities pursuant to an Order-in-Original dated 9 April 2024 determining tax liability. The petitioner contended that although the adjudication order had been passed, the department had not uploaded the mandatory summary of the order in FORM GST DRC-07 on the GST portal. Despite this omission, the authorities proceeded to initiate recovery measures against the petitioner.

The Hon’ble Madras HC held that under Rule 142(6) a summary of the order in FORM GST DRC-07 specifying the amount of tax, interest and penalty payable shall be communicated through the GST portal to ensure transparency and provide taxpayers with a clear digital trail of notices, orders and demands and concluded. Accordingly, recovery cannot be initiated unless the statutory requirement of issuing the summary in FORM GST DRC-07 has been fulfilled.

Customs and Foreign Trade Policy Related Developments

Amended Courier Imports and Exports Regulations

Vide Notification No. 33/2026- Customs (N.T.) dated 31 March 2026; Exports (Electronic Declaration and Processing) Amendment Regulations, 2010 have been renamed to Exports (Electronic Declaration and Processing) Amendment Regulations, 2026 and made effective from 1 April 2026. On similar lines Courier Imports and Exports (Clearance) Amendment Regulations, 2026 have been notified vide Notification No. 34/2026- Customs (N.T.) dated 31 March 2026.

The key amendment introduced includes:

• Omission of existing provision
• Facilitation for uncleared imported goods and operational flexibility in courier handling to improve efficient handling of abandoned or rejected shipments,
• Reduce compliance burden and improve ease of doing business.

The notifications primarily simplify courier regulations and permits re-export of uncleared goods after 15 days.

Updates related to Postal Exports

Vide Notification 04/2026- Customs (N.T.) and 04/2026- Customs (N.T.) dated 15 January 2026, postal exports are integrated into mainstream customs export incentive framework providing RoDTEP benefits, electronic processing and recognition of Section 84 filings for exports via courier.

Vide Notification No. 07/2026- Customs (N.T.) dated 15 January 2026; Postal Export (Electronic Declaration and Processing) Regulations, 2022 have been renamed to Postal Export (Electronic Declaration and Processing) Amendment Regulations, 2026. In the new rules, new formats have been released for Form Postal Bill of Export- III (for postal exports through E-Commerce) and Postal Bill of Export -IV (for other portal exports) to include additional information related to duty drawback and other export schemes. The Notification can be referred for the detailed format.

Vide Circular No. 01/2026-Customs dated 1 January 2026; CBIC has operationalized the entire process of postal exports by connecting the DNK portal of Department of Posts with lCES for automation of export benefits.

Change in definition of re-imported goods

Notification No. 08/2026-Customs dated 30 March 2026 amends the customs exemption for re-import of goods through courier mode, other than excluded goods under the Courier Imports and Exports (Electronic Declaration and Processing) Regulations, 2010, subject to risk-based assessment and the benefit will be effective from 1 April 2026.

Tariff concessions under Agreement India-UAE and India-Mauritius

Vide Notification No. 9/2026 – Customs dated 31 March 2026; the CBIC has issued the fifth tranche of tariff concessions in case of goods imported from UAE. The concession includes various exemptions from Basic Customs Duty, Health Cess and Agriculture Infrastructure and Development Cess on various goods. The notifications can be referred to understand the tariff concessions in detail.

Similarly, vide Notification No. 10/2026-Customs dated 31 March 2026; the CBIC has issued the sixth tranche of tariff concessions in case of goods imported from Mauritius.

Duty relief for supplies made from SEZ to DTA

The CBIC has issued Notification No. 11/2026-Customs dated 31 March 2026 exempting certain specified goods from customs duty when supplies are made from Special Economic Zone (SEZ) to Domestic Tariff Area (DTA) with an introduction to special one-time relief window which permits SEZ Units to clear specified manufactured goods into the Domestic Tariff Area at concessional customs duty rates and for certain entries at reduced customs duty and Agriculture Infrastructure and Development Cess rates. The eligibility of availing the concessional customs duty benefit would be subject to conditions such as prior commencement of production on or before 31 March 2025, a 20% minimum value addition, adherence to annual clearance limits linked to prior export turnover, etc.

This notification has been introduced to promote domestic sales amid global trade disruptions and is valid from 1 April 2026 to 31 March 2027.

Addition of Payment Aggregator in Authorised Modes

Vide Notification No. 30/2026- Customs (N.T.) dated 15 January 2026; the Customs (Electronic Cash Ledger) (Amendment) Regulations, 2026 expand the permitted modes for depositing into the electronic cash ledger by inserting payment aggregator as an additional method in Regulation 3(6) and updating Regulation 3(7) accordingly. The amendment recognizes payment through a payment aggregator as part of the prescribed deposit mechanism alongside the existing payment channels.

The procedural clarifications and implementation mechanism is further clarified vide Circular No. 13/2026-Customs dated 10 March 2026. Further, the number of live banks for Internet Banking has increased to 41 from 23 apart from authorized mode to facilitate customs duty payment with credit card, debit card and UPI which are enabled.

Circulars and Instructions under Customs

• Vide Circular No. 08/2026-Customs dated 28 February 2026; the CBIC has clarified on the criteria to qualify as an Eligible Manufacturer Importer (EMI). EMI can avail the facility of deferred payment of Customs import duty with effect from 1 April 2026 and facility is available until 31 March 2028. The circular can be referred to for the detailed conditions and process of application to obtain EMI registration.
• Vide Circular No. 09/2026-Customs dated 8 March 2026, 12/2026-Customs dated 7 March 2026 and 15/2026 dated 27 March 2026; CBIC has provided certain relaxation measures for vessels carrying export cargo from India that were unable to reach their destination ports due to closure of the Strait of Hormuz and consequent disruption in maritime routes. CBIC has laid the process of transshipment and Back to Town (BTT) to be followed in cases where the vessel has landed at an Indian port which is different from original port of departure. These circulars can be referred to for the detailed process and relaxation measures provided by the CBIC. Further, Vide Circular No. 10/2026-Customs dated 10 March 2026, the CBIC has exempted payment of fees in cases where export documents need to be cancelled or amended due to force majeure circumstances.
• Vide Circular No 17/2026-Customs dated 31 March 2026, the CBIC has enabled ease of doing business for E-Commerce and Courier. Following measures were introduced:
  • Removal of the earlier value cap on commercial export consignments sent through courier, extending the facilitation to non-e-commerce exports as well;
  • A simplified Return to Origin procedure is prescribed for uncleared or unclaimed imported goods lying in International Courier Terminals for more than 15 days, where the goods are not prohibited, restricted, or intercepted by an enforcement agency;
  • The process for re-import of returned and rejected goods in courier mode, including e-commerce returns and rejects, is simplified through a risk-based approach and a dedicated Return Module.

Miscellaneous updates under Foreign Trade Policy and SEZ

• Vide Notification No. 60/2025-26 dated 23 February 2026, the benefit of RoDTEP scheme was reduced to 50 per cent of the notified rates with immediate effect. However, pursuant to the geopolitical instability and disruption in trade, the said notification was superseded vide Notification No. 66/2025-26 dated 23 March 2026 with retrospective effective and the benefits were restored for exporters.
• Further, Vide Notification No. 74/2025-26 dated 31 March 2026, the RoDTEP scheme has been extended and eligible exports made during the period from 1 April 2026 to 30 September 2026, subject to the existing terms and conditions of the Scheme.
• Time-limited Support for Exporters in view of Geopolitical Disruptions in the Gulf and West Asia Maritime Corridor: vide DGFT vide Notification 65/2025-26 dated 19 March 2026; the government has approved support of INR 4.97 Billion to Indian exporters under RELIEF – Resilience & Logistics Intervention for Export Facilitation under three components-
  1. Export Credit Support for Export Credit Guarantee Corporation of India’s (‘ECGC’) already insured exporters
  2. Encourage and facilitate ECGC coverage for Export Credit Support for upcoming exports in the region;
  3. Reimbursement support for extraordinary freight and insurance surcharge borne by eligible non-ECGC-insured MSME exporters.
• Vide Public Notice No. 51/2025-26 dated 6 March 2026, Export Obligation (EO) period / Block-wise EO period in respect of specified Advance Authorizations and EPCG Authorizations expiring between 1 March 2026 and 31 May 2026 has been automatically extended up to 31 August 2026 without payment of composition fee to facilitate exporters amid prevailing geopolitical developments affecting international shipping routes and global supply chains. Further vide Policy Circular 10/2025-26, relief has been given to Average EO in terms of the para 5.17(a) of Hand Book of Procedures of FTP,2023.

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