GSTN Advisory, Dated 23-01-2026
1. Introduction: GSTN Issues Advisory on RSP-Based Valuation
The Goods and Services Tax Network (GSTN) has issued an advisory dated 23 January 2026 to guide taxpayers on reporting taxable value and tax liability for notified tobacco and tobacco-related goods under GST. The advisory applies with effect from 1 February 2026 and addresses compliance aspects of Retail Sale Price (RSP)-based valuation.
2. Legal Framework Governing RSP-Based Valuation
The advisory refers to Notification No. 19/2025–Central Tax and Notification No. 20/2025–Central Tax, both dated 31 December 2025. Under these notifications, GST on specified tobacco products is required to be computed on the basis of the RSP declared on the package, irrespective of the actual transaction value agreed between the supplier and the recipient.
3. Computation of Deemed Taxable Value
GSTN has clarified the statutory mechanism for deriving the deemed taxable value and corresponding tax amount from the declared RSP. Even where the commercial consideration differs from the deemed value, taxpayers are required to strictly apply the prescribed RSP-based valuation formula for computing GST liability on the notified goods.
4. Reporting in e-Invoice, e-Way Bill and GST Returns
For reporting purposes in e-Invoice, e-Way Bill, and GSTR-1, GSTR-1A, or IFF, taxpayers must disclose the net sale value, being the commercial consideration, in the taxable value field. However, tax must be calculated strictly as per the RSP-based valuation. The total invoice value should be reported as the aggregate of the net sale value and the tax so computed, even where the deemed taxable value does not align with the transaction value.
5. Conclusion: Compliance Responsibility on Taxpayers
The advisory makes it clear that this reporting mechanism is applicable only to the notified HSNs and places the responsibility of correct self-assessment on taxpayers. Proper identification and classification of goods, accurate computation of tax based on RSP, and verification of reported figures are essential to ensure compliance and avoid disputes under GST.
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