The short answer
Notifications No. 06 to 10/2026-Central Tax (Rate), with the matching Integrated Tax (Rate) notifications, all dated 27 October 2026, change GST on several services from 1 November 2026. Circular No. 266/12/2026-GST (28 October 2026) clarifies six more service questions. The main changes:
- Electric vehicles: new 2.5% central-tax entries (5% with State tax) for passenger transport and EV renting where the battery-charging cost is included, with 9% central tax as the alternative.
- Hotels, restaurants and caterers on the 2.5% entries can now take ITC on the same service bought from another supplier, capped at 2.5%.
- Delivery through e-commerce: a new 2.5% entry, and the e-commerce operator pays tax unless the delivery provider is liable to register.
- New exemptions for seat-share helicopter flights in the North-East, toll rights granted by government, coffee curing, the Seamen's Provident Fund Organisation, and storage of seeds; and a new toll-operate-transfer procedure.
- Circular 266: R&D vs consultancy certification, foreign shipping companies, vehicle-lease recoveries, TRAI, bank fund-transfer pricing, and NBFC co-lending.
Electric vehicles: passenger transport and renting
Notification 06/2026-CT(R) amends Notification 11/2017-CT(R) and inserts three entries:
- S. No. 8(vib): transport of passengers by an electrically operated vehicle;
- S. No. 10(ib): renting of an electrically operated vehicle designed to carry passengers;
- S. No. 10(ic): renting of an electrically operated vehicle for transport of goods.
Each applies where the cost of battery charging is included in the consideration. The rate is 2.5% central tax, on condition that ITC on goods and services used is not taken. The one exception is ITC on the same service bought from another provider, up to 2.5% of its value. The alternative in each entry is 9% central tax. An "electrically operated vehicle" is a road vehicle running solely on electrical energy from an external source or batteries fitted to it, and includes e-bicycles.
The notification's own illustration: B charges A 2.5% for an EV trip of ₹1,000 and hires an EV with operator from C for ₹800, on which C charges 9% (₹72). B can take credit of only ₹20 (2.5% of ₹800), not ₹72.
Hotels, restaurants and caterers: same-line ITC
The 2.5% central-tax entries under S. No. 7 of Notification 11/2017-CT(R) carried a condition that no ITC is taken. From 1 November 2026 each allows one category of credit, the input service in the same line of business:
- hotel accommodation procured from another hotel;
- restaurant service procured from another restaurant (other than at specified premises);
- food and drinks in trains or at platforms procured from Indian Railways, IRCTC or their licensees (here, both inputs and input services);
- outdoor catering procured from another outdoor caterer, including composite supplies with renting of premises.
For hotel accommodation and outdoor catering, where the other supplier charges more than 2.5% central tax, credit is limited to 2.5% of the value. In the notification's hotel example, B sells a room to A at 2.5% and buys it from C for ₹10,000 at 9% (₹900): B's credit is ₹250, not ₹900.
Delivery services and e-commerce
- Rate. S. No. 12(iii) of Notification 11/2017-CT(R) is substituted. Delivery services (other than those in items (i) and (ii)) attract 2.5% central tax without ITC where they are supplied through an e-commerce operator by a person not liable to register under section 22(1), or relate to goods supplied through an e-commerce operator.
- Who pays. Notification 09/2026-CT(R), under section 9(5), substitutes clause (v) of Notification 17/2017-CT(R). The operator is liable for tax on delivery services (other than postal and courier) supplied through it, except where the supplier is liable to register under section 22(1).
- GTA exemption. The exemption at S. No. 21A of Notification 12/2017-CT(R) no longer applies to GTA services for goods supplied through an e-commerce operator. A "goods transport agency" is now anyone providing road transport of goods who issues a consignment note "by whatever name called".
New exemptions (Notification 07/2026-CT(R))
- Transport of passengers by helicopter on a seat-share basis, embarking from or terminating at an airport or helipad in Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, or at Bagdogra.
- Storage or warehousing of cereals, pulses, fruits, vegetables and seeds meant for sowing. "Seed" is defined widely, to cover seedlings, tubers, bulbs, cuttings, grafts, tissue-culture plantlets and other planting material.
- Services by the Seamen's Provident Fund Organisation to persons governed by the Seamen's Provident Fund Act, 1966.
- Grant by the Central or a State Government, a local authority, or a governmental authority or entity of an exclusive right to demand, collect and appropriate toll.
- Curing of coffee supplied to coffee cultivators.
Notification 07/2026-Integrated Tax (Rate) also exempts, from 1 November 2026, import of services by an Indian establishment of a foreign shipping company from a related person or its establishment outside India, made without consideration (as recorded in Circular 266).
Toll-operate-transfer concessionaires (Notification 10/2026-CT(R))
Under section 148, a concessionaire supplying operation and maintenance services to the concessioning authority under a toll-operate-transfer agreement (one where the concession fee is paid upfront) pays tax on the amount charged or debited from the escrow account towards O&M expenses, in the tax period in which it is so charged or debited.
Circular 266: six clarifications
- R&D vs consultancy. For the exemption at Entry 44A of Notification 12/2017-CT(R) (R&D against grants by government entities, research associations, universities, colleges or institutions notified under section 35(1)(ii)/(iii) of the Income-tax Act, 1961), a certificate from the head of the institution that the activity is R&D and not consultancy may suffice.
- Foreign shipping companies. GST on import of services without consideration from a related person abroad is regularised "as is where is" for 1 July 2017 to 31 October 2026. It is exempt from 1 November 2026.
- Vehicle leasing. Registration charges (including road tax), insurance, FASTag and other incidental expenses the lessor recovers on top of the lease rent are part of the value of the composite leasing supply, taxed at the leasing rate.
- TRAI is not "Government" under section 2(53) of the CGST Act.
- Banks' fund transfer pricing. The notional interest recorded under FTP when the head office moves funds between branches is "interest" for the exemption in Notification 12/2017-CT(R).
- NBFC co-lending. Lending services (sourcing, KYC, appraisal, servicing, collection and so on) provided by an NBFC to a bank in a co-lending arrangement are taxable, at the value in their agreement.
One change to check against the full notification
Notification 08/2026-CT(R) changes a rate figure in S. No. 15 of Notification 13/2017-CT(R), the reverse-charge list, from 6 to 9. Notification 08/2026-IT(R) changes the corresponding IGST figure in S. No. 17 of Notification 10/2017-IT(R) from 12 to 18. The amendments do not reproduce the entries. If you buy services covered by that reverse-charge entry, read it in the consolidated notification to see how the change affects you.
What to do now
- EV fleet operators and renters: decide between 2.5% without general ITC and 9% with ITC, and invoice accordingly from 1 November.
- Hotels, restaurants and caterers: start claiming same-line ITC from 1 November, capped at 2.5% where the rule applies.
- E-commerce sellers and operators: check who pays tax on delivery and whether the GTA exemption still applies.
- Banks and NBFCs: treat FTP notional interest as exempt interest, and charge GST on co-lending service fees.
- Leasing companies: include road tax, insurance and FASTag recoveries in the taxable value.
Related: 57th GST Council overview and the ITC circulars on ISD, banks and demo vehicles.
Sources: Notifications No. 06, 07, 08, 09 and 10/2026-Central Tax (Rate) and No. 07 and 08/2026-Integrated Tax (Rate), all dated 27 October 2026, and CBIC Circular No. 266/12/2026-GST dated 28 October 2026, read from the copies on CBIC's Tax Information Portal. Pages 2-5 of Circular 266 are scanned and were read from the images. Rates are stated as central tax, as in the notifications. This article is not legal advice on a particular case.
