Government Notifies CGST (Fifth Amendment) Rules, 2025: Introduction of Retail Sale Price-Based Valuation

1. Introduction of Rule 31D for Valuation

New Valuation Method: A new Rule 31D has been inserted into the CGST Rules, 2017.
Basis of Valuation: For notified goods, the value of supply shall be deemed to be the Retail Sale Price (RSP) declared on the package, reduced by the amount of applicable tax, notwithstanding other valuation provisions.

2. Specified Goods Covered

The new valuation rule applies to specific goods falling under Customs Tariff Act headings 2106, 2401, 2402, 2403, and 2404.
List of Goods:
- Pan masala
- Unmanufactured tobacco (excluding tobacco leaves)
- Cigars, cheroots, cigarillos, and cigarettes
- Other manufactured tobacco and tobacco substitutes
- Products containing tobacco or nicotine substitutes intended for inhalation without combustion.

3. Definition and Determination of Retail Sale Price (RSP)

Definition: RSP is defined as the maximum price declared on the package, inclusive of all taxes, duties, cesses, or surcharges.
Multiple Prices: If multiple retail sale prices are declared on a package, the highest price will be treated as the RSP.
Price Increases: Any increase in the declared RSP at any stage (before, during, or after supply) will be considered for valuation.
Regional Pricing: If separate RSPs are declared for different areas, the RSP relevant to the respective area will apply.

4. Amendment to Rule 86B (New Clause ‘f’)

Relief from Restrictions: A new clause (f) has been added to Rule 86B.
Exemption: Registered persons (other than manufacturers) dealing in the specified goods under Rule 31D are now exempted from the restrictions on the use of the electronic credit ledger, provided the tax has already been paid by the supplier based on the Retail Sale Price.

5. Effective Date

These amendments, introduced via Notification No. 20/2025–Central Tax, will come into force effectively from 1st February 2026.