The GST Network (GSTN) has issued an important advisory regarding reporting of taxable value and tax liability under RSP-based valuation for notified tobacco goods. This advisory provides clarity on how such supplies should be reported in e-Invoice, e-Way Bill and GST returns (GSTR-1 / GSTR-1A / IFF).
This update is crucial for manufacturers, wholesalers, distributors, and other taxpayers dealing in tobacco products notified under GST for RSP-based valuation.
1. Background: What is RSP-Based Valuation under GST?
Under GST law, certain goods—especially notified tobacco products—are taxed based on the Retail Sale Price (RSP)printed on the package, after allowing the notified abatement, instead of the transaction value.
In simple terms:
- GST is not calculated on invoice value
- GST is calculated on RSP minus abatement
- This valuation is mandated under Section 15(4) of the CGST Act read with relevant notifications
2. Purpose of the Advisory
The advisory has been issued to:
- Ensure uniform reporting of RSP-based taxable value
- Avoid mismatch between tax liability and reported value
- Align e-Invoice, e-Way Bill and GST returns with RSP-based valuation rules
- Reduce notices and scrutiny issues due to incorrect reporting
3. Key Clarification Provided by GSTN
(A) Taxable Value to be Reported
For notified tobacco goods under RSP-based valuation:
✅ Taxable value must be the value calculated on RSP basis (after abatement)
❌ Actual transaction value / invoice value should NOT be treated as taxable value
This applies uniformly across:
- e-Invoice
- e-Way Bill
- GSTR-1 / GSTR-1A
- Invoice Furnishing Facility (IFF)
4. Reporting in e-Invoice
While generating an e-Invoice for notified tobacco goods:
- Taxable value field must reflect:
- RSP
- Less: notified abatement
- Resulting assessable value
- GST rate and tax amount should be calculated on this RSP-based taxable value
- Invoice value may differ from taxable value, which is acceptable under law
🔴 Common mistake to avoid:
Reporting transaction value as taxable value in e-Invoice, which leads to incorrect tax computation.
5. Reporting in e-Way Bill
For e-Way Bill generation:
- Taxable value reported must match RSP-based valuation
- Value auto-populated from e-Invoice should not be altered incorrectly
- Any mismatch between e-Invoice and e-Way Bill may attract system-based alerts
6. Reporting in GSTR-1 / GSTR-1A / IFF
In GST returns:
- Table-wise reporting should reflect:
- RSP-based taxable value
- Correct tax liability
- This ensures:
- Proper reflection in recipient’s GSTR-2B
- Avoidance of mismatch between tax paid and outward supplies reported
IFF filers (monthly filers opting to report quarterly outward supplies) must also strictly follow this valuation method.
7. Impact on Taxpayers
This advisory is especially relevant for:
- Tobacco manufacturers
- Cigarette traders
- Distributors and wholesalers of notified tobacco goods
Incorrect reporting may result in:
- System-generated notices
- Mismatch in GST returns
- Scrutiny during audit or assessment
- Demand of differential tax, interest, and penalty
8. Action Points for Taxpayers
✔ Review ERP / billing software configurations
✔ Ensure RSP-based valuation logic is correctly applied
✔ Train accounting and compliance teams
✔ Reconcile taxable value across:
- e-Invoice
- e-Way Bill
- GSTR-1 / IFF
✔ Refer to the detailed GSTN advisory for technical guidance
The GSTN advisory dated 23 January 2026 is a significant compliance clarification for taxpayers dealing in notified tobacco goods under RSP-based valuation. Correct reporting of taxable value across all GST systems is essential to avoid future disputes and ensure seamless compliance.
Taxpayers should immediately align their invoicing and return filing practices with this advisory to remain fully GST-compliant.
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