The CBIC has issued Notification No. 20/2025–Central Tax dated 31.12.2025, to notified the Central Goods and Services Tax (Fifth Amendment) Rules, 2025, inserting Rule 31D in the CGST Rules, 2017, with effect from 1 February 2026. This amendment introduces a deemed valuation mechanism based on Retail Sale Price (RSP) for specified tobacco and allied products. Further, Notification No. 19/2025–Central Tax has been issued to amends Notification No. 49/2023–CT which was issued under Section 15(5) of the CGST Act, 2017 (special valuation provisions), and must be read together with newly inserted Rule 31D of the CGST Rules, 2017. The amendment extends the special valuation mechanism based on Retail Sale Price (RSP) to specified tobacco and pan masala products, by statutorily recognizing RSP-based valuation for such goods when supplied.

These Changes are discussed as under:

1. Insertion of New Rule 31D –  Value of supply of goods on basis of retail sale price: 
   • This makes Retail Sale Price (RSP)–based valuation mandatory for specified goods, irrespective of transaction value or open market value.
   • The rule applies only to specified goods, namely Pan Masala, Unmanufactured tobacco (excluding tobacco leaves), Cigarettes, cigars, cigarillos,  Other manufactured tobacco (excluding biris), Tobacco or nicotine products intended for inhalation without combustion.
   • The value of supply is deemed to be the declared RSP, minus GST. RSP is treated as tax-inclusive, similar to MRP-based excise valuation earlier.
   • GST payable is computed using a reverse calculation formula: Tax = (RSP × applicable tax rate) ÷ (100 + applicable tax rate)
2. Amendment in in rule 86B
   
   A corresponding amendment to Rule 86B by inserting clause (f), providing registered persons other than manufacturers shall be exempt from Rule 86B restrictions only in respect of goods covered under Rule 31D, provided the supplier has discharged tax on RSP basis. This ensures that downstream dealers are not subjected to additional ITC restrictions where tax has already been paid on a deemed RSP value.
   

The Notification No. 19/2025–Central Tax can be accessed at https://taxo.online/wp-content/uploads/2026/01/19-2025-ct.pdf

The Notification No. 20/2025–Central Tax can be accessed at https://taxo.online/wp-content/uploads/2026/01/20-2025-ct.pdf