Quick Summary
The Goods and Services Tax Network (GSTN) has issued an important advisory clarifying the reporting and compliance mechanism for RSP-based valuation of notified tobacco and tobacco-related products, effective 1 February 2026. The advisory follows the issuance of Notification Nos. 19/2025-CT and 20/2
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FAQ :
RSP-based valuation for notified tobacco and tobacco-related products will be effective from 1st February 2026.
The products affected include pan masala, unmanufactured tobacco and tobacco refuse, cigarettes, cigars and cigarillos, other manufactured tobacco products (excluding bidis), and tobacco or nicotine products for inhalation without combustion.
GST will be computed using the formula: Tax Amount = (RSP × Applicable GST Rate) / (100 + Applicable GST Rate). The taxable value is then derived by deducting this tax amount from the RSP.
The main challenge is that existing systems (e-Invoice, e-Way Bill, GSTR-1) are based on transaction value, which may lead to validation errors when the deemed taxable value (RSP-based) exceeds the commercial invoice value.
Taxpayers should report the Net Sale Value as the Taxable Value, compute the Tax Amount strictly as per the RSP-based formula, and report the Total Invoice Value as Net Sale Value + Tax Amount. Manual adjustments to tax amounts in GSTR-1 may be necessary.
No, the advisory provides a reporting mechanism as a facilitation measure and does not dilute the statutory provisions. Taxpayers are responsible for self-assessment and ensuring correct compliance.
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