GST Overhaul From Feb 2026: RSP-Based Valuation Introduced And ITC Utilisation Curbs Expanded; No. 20/2025–Central Tax

The Government has notified the CGST (Fifth Amendment) Rules, 2025, effective 1 February 2026, introducing significant changes to GST valuation and input tax credit restrictions. A new Rule 31D has been inserted to provide a Retail Sale Price (RSP)–based mechanism for valuation of specified supplies, empowering the Government to notify goods whose taxable value will be determined with reference to the declared RSP (with prescribed abatements), aligning GST valuation with consumer-facing pricing models.

Additionally, clause (f) has been inserted in Rule 86B, expanding the circumstances in which utilisation of ITC is restricted beyond 99% of output tax liability, thereby strengthening anti-evasion controls. Together, these amendments signal a move towards tighter valuation norms for notified goods and enhanced safeguards against misuse of ITC, with clear compliance implications for affected taxpayers from FY 2026 onwards.