GST WEEKLY UPDATE :47/2025-26 (22.02.2026) By CA Vipul Khandhar

Reading Time: 7 minutes

-By CA Vipul Khandhar

1. Facility for Withdrawal from Rule 14A – Filing of Form GST REG-32 Enabled on GST Portal:(Advisory dated 21 February 2026):

The Goods and Services Tax Network (GSTN) has introduced an important compliance facilitation measure by enabling an online facility for withdrawal from registration opted under Rule 14A of the CGST Rules, 2017. Eligible taxpayers can now file Form GST REG-32 on the GST Portal to opt out of Rule 14A registration.

This development addresses practical difficulties faced by taxpayers who had opted for registration under Rule 14A and now seek to migrate to the regular registration framework.

1. Legal Background – Rule 14A of the CGST Rules, 2017

Rule 14A provides for a special registration mechanism under the CGST Rules for specified categories of taxpayers who opt for registration subject to prescribed conditions and restrictions.

Key characteristics of registration under Rule 14A include:

• Optional registration under specified category.
• Restrictions on furnishing outward supply details beyond prescribed limits (including B2B liability threshold of ₹2.5 lakh per tax period).
• Special monitoring and authentication requirements.
• System-based compliance controls on return filing.

The rule aims to regulate certain high-risk or monitored categories while allowing controlled participation in the GST ecosystem.

With the newly enabled functionality, taxpayers can now exit this optional category subject to compliance with statutory conditions.

2. Eligibility to Apply for Withdrawal

The following taxpayers are eligible:

• Active registered persons currently registered under Rule 14A.
• Taxpayers compliant with return filing requirements as prescribed.
• Applicants willing to undergo Aadhaar authentication as mandated.

The withdrawal request must be filed electronically in Form GST REG-32.

3. Step-by-Step Procedure on GST Portal

After login to the GST Portal:

Navigation Path:Services → Registration → Application for Withdrawal from Rule 14A

Important system features:

• The link will be visible only if the taxpayer:
  • Is registered under Rule 14A, and
  • Is in active status.
• The field “Option for registration under Rule 14A” will be auto-selected as “No”.
• The applicant must:
  • Enter reason for withdrawal.
  • Proceed to Aadhaar Authentication tab.
  • Authenticate:
    • Primary Authorised Signatory (mandatory), and
    • One Promoter/Partner (where applicable).

4. Statutory Pre-Conditions for Filing REG-32

Form GST REG-32 cannot be filed unless the following return compliance conditions are satisfied:

(A) Filing before 1 April 2026

• Returns must be furnished for a minimum period of three months.

(B) Filing on or after 1 April 2026

• Returns must be furnished for at least one tax period.

(C) In all cases

• All returns due from the effective date of registration till the date of filing REG-32 must be filed.

This ensures that only compliant taxpayers are permitted to exit the Rule 14A framework. 

5. Aadhaar Authentication Requirements

Based on system-driven risk analysis:

• Taxpayer will undergo either:
  • OTP-based Aadhaar authentication, or
  • Biometric Aadhaar authentication.

Authentication is mandatory for:

• Primary Authorised Signatory (compulsory), and
• At least one Promoter/Partner.

Important:
ARN (Application Reference Number) will be generated only after successful Aadhaar authentication.

6. Timelines – Strict System Controls

Particular	Time Limit
Submission of draft application	Within 15 days of creation
Completion of Aadhaar/Biometric authentication	Within 15 days from submission
Failure to authenticate within time	ARN will not be generated

Taxpayers must adhere strictly to these timelines, as the system will auto-invalidate incomplete applications.

7. Restrictions During Pendency of REG-32

While the withdrawal application is pending:

The taxpayer cannot file:

• Core amendment application
• Non-core amendment application
• Self-cancellation application

This restriction prevents parallel structural changes during processing of opt-out request.

8. Post-Sanction Consequences (Order in Form GST REG-33)

Upon approval:

• Order will be issued in Form GST REG-33.
• From the first day of the succeeding month in which the order is issued, the taxpayer will be permitted to:
  • Furnish details of output tax liability on supplies to registered persons
  • Even if the output tax liability exceeds ₹2.5 lakh (earlier restriction under Rule 14A)

This effectively restores the taxpayer to the regular compliance framework without the Rule 14A restrictions. 

9. Practical Impact & Professional Considerations

✔ Compliance Relief

Taxpayers who faced operational limitations due to the ₹2.5 lakh B2B liability cap can now regularise their position.

✔ System-Driven Governance

Strong Aadhaar authentication and return compliance checks indicate continued risk-based supervision.

✔ Advisory to Professionals

Practitioners should:

• Review client return filing status before initiating REG-32.
• Ensure Aadhaar authentication readiness.
• Advise clients regarding temporary restriction on amendments during pendency.
• Monitor issuance of REG-33 to determine effective date of unrestricted compliance.

10. Conclusion

The activation of withdrawal facility under Rule 14A via Form GST REG-32 marks a significant procedural improvement. While compliance safeguards remain stringent, the system now provides a structured exit route for taxpayers who wish to transition out of the optional Rule 14A registration category. (Team GSTN Advisory – 21 February 2026)

2. GSTN Advisory on Interest Collection & GSTR-3B Enhancements (Effective January 2026):

Alignment with Section 50 of CGST Act and Rule 88B(1) – A Technical Analysis for Tax Professionals

The Goods and Services Tax Network (GSTN) has issued an important advisory introducing system-driven enhancements in GSTR-3B from the tax period January 2026 onwards .The changes primarily relate to:

• Revised interest computation mechanism
• Auto-population of tax liability breakup
• ITC cross-utilisation flexibility
• Interest recovery through GSTR-10

These measures operationalise the proviso to Section 50 of the CGST Act, 2017 and the computational framework under Rule 88B(1) of the CGST Rules, 2017.

1. Legislative Framework
2. Section 50 of the CGST Act, 2017

Section 50 governs levy of interest on delayed payment of tax. The proviso clarifies that interest is payable only on that portion of tax paid by debiting the electronic cash ledger, thereby preventing undue levy on ITC-adjusted amounts.

2. Rule 88B(1) of the CGST Rules, 2017

Rule 88B(1) prescribes the method for computation of interest on delayed payment of tax. The GSTN enhancement now integrates this statutory computation into the portal itself .

5. Revised Interest Computation in Table 5.1 of GSTR-3B

Effective From:

January 2026 tax period onwards .

Core Enhancement:

The GST Portal will now compute interest by considering the minimum cash balance available in the Electronic Cash Ledger (ECL) from:

• Due date of return filing
• Till the date of tax payment (offset)

Revised Formula (System Based)

Interest = (Net Tax Liability – Minimum Cash Balance in ECL from due date to date of debit) × (No. of days delayed / 365) × Applicable Interest Rate

Key Compliance Implications

• Interest auto-populated in Table 5.1 will be non-editable downward .
• Taxpayers may increase the amount if their own computation reflects higher liability.
• The system-calculated interest represents minimum mandatory interest.

Practical Significance

• Prevents excessive interest where cash was already available in ECL.
• Aligns portal computation with statutory intent.
• Reduces interpretational disputes.

III. Auto-Population of “Tax Liability Breakup Table”

From January 2026 onwards, GST Portal will auto-populate the Tax Liability Breakup Table in GSTR-3B.

Mechanism

• Based on date of documents reported in:
  • GSTR-1
  • GSTR-1A
  • IFF
• Where tax is discharged in current GSTR-3B.

Viewing Path:

Login → GSTR-3B Dashboard → Table 6.1 (Payment of Tax) → Tax Liability Breakup

Compliance Insight

• Enhances transparency in reporting prior-period supplies.
• Ensures correlation between outward supplies and tax discharge.
• Strengthens departmental analytics on delayed reporting.

6. Suggestive Cross-Utilisation of ITC (Table 6.1)

The portal now permits flexible utilisation once IGST ITC is exhausted.

Change Introduced:

After full exhaustion of IGST ITC, the taxpayer may utilise:

• CGST ITC and SGST ITC
• In any sequence for payment of IGST liability

Professional Note

This is a system facilitation measure and does not override statutory cross-utilisation hierarchy under Sections 49 and 49A of the CGST Act.

1. Interest Collection through GSTR-10 (Final Return)

In case of cancellation of registration:

If the last applicable GSTR-3B was filed belatedly, the interest on delayed filing shall be recovered through GSTR-10 (Final Return) .

Implication

• Ensures closure compliance.
• Prevents leakage of interest liability upon cancellation.

1. Analytical Observations
2. System-Based Governance

The GST Portal is increasingly transitioning from facilitative interface to compliance-enforcement architecture.

2. Reduced Litigation Potential

Incorporation of Rule 88B(1) logic into system reduces discretionary computation disputes.

3. Compliance Risk Areas

Taxpayers must:

• Monitor ECL balances on due dates.
• Maintain reconciliation between GSTR-1 and GSTR-3B.
• Independently compute interest to verify portal values.

4. Advisory Character

GSTN has clarified that auto-populated values are suggestive in nature and may be revised upward if required .

VII. Conclusion

The January 2026 enhancements mark a significant structural reform in GST return compliance. By embedding statutory computation under Section 50 read with Rule 88B(1) into the portal, GSTN has aligned technological processes with legislative intent.

Tax professionals must now recalibrate internal compliance systems to ensure:

• Timely return filing
• Adequate ECL funding before due dates
• Accurate reporting of prior-period liabilities
• Proper final return compliance upon cancellation

The advisory represents a movement toward automated compliance precision, thereby strengthening the integrity of GST administration.

Disclaimer: This article is intended for academic and professional discussion. Readers are advised to refer to statutory provisions, rules, notifications and official circulars for legal compliance purposes.

3. GSTN Enables Separate “Rejected Records” Tab in IMS Dashboard:

Streamlining Add-Back of Tax Liability in GSTR-3B

In a significant compliance facilitation measure, GSTN has introduced a new functionality enabling taxpayers to separately view rejected Credit Notes/Debit Notes and related amended records in the Invoice Management System (IMS) Dashboard.

This enhancement directly addresses practical challenges faced by taxpayers in identifying cases where tax liability is required to be re-added in Form GSTR-3B.

Background and Compliance Challenge

Under the GST framework, where a Credit Note is issued and subsequently rejected by the recipient, the supplier is required to add back the corresponding tax liability in the relevant GSTR-3B.

Earlier, the system did not provide a segregated view of such rejected records. Taxpayers were required to:

• Manually scrutinize IMS entries
• Identify rejected Credit/Debit Notes
• Determine whether tax liability required re-addition
• Reconcile IMS with GSTR-3B manually

This process was not only time-consuming but also increased the risk of reporting errors and oversight.

Key Highlights of the Enhancement

1. Introduction of “Rejected Records” Tab

A separate “Rejected Records” tab has now been introduced in the IMS Dashboard under Outward Supplies.

This tab specifically displays:

• Rejected Credit Notes (Registered)
• Rejected Debit Notes (Registered)
• Other relevant amended records
• Entries where tax liability needs to be re-added in GSTR-3B

This structured segregation provides clarity and reduces interpretational ambiguity.

2. Clear Identification of Add-Back Liability

The system now proactively identifies records where:

• Credit/Debit Notes have been rejected
• Tax liability adjustment earlier claimed requires reversal
• Liability must be reported again in GSTR-3B

This eliminates the need for extensive manual review of all IMS entries.

3. Excel Download Facility Continues

Taxpayers can continue to:

• Download IMS details in Excel format
• Perform internal reconciliation
• Maintain audit trail documentation

This ensures flexibility for large taxpayers and professional firms managing bulk data.

Compliance Impact and Practical Significance

The enhancement is expected to deliver tangible improvements:

✔ Simplified Reconciliation

Clear mapping between IMS rejected records and GSTR-3B reporting requirements.

✔ Reduced Compliance Burden

Eliminates the need for exhaustive manual verification of outward supply adjustments.

✔ Improved Accuracy in Reporting

Minimises risk of:

• Under-reporting tax liability
• Incorrect credit note adjustments
• Departmental scrutiny or notices

✔ Stronger System-Driven Governance

The GST Portal continues to evolve from a passive reporting platform to an active compliance-assistive system.

Professional Perspective

From a tax advisory standpoint, this functionality strengthens:

• Internal compliance controls
• Monthly reconciliation processes
• Litigation preparedness

Professionals should advise clients to:

• Regularly review the “Rejected Records” tab before filing GSTR-3B
• Maintain documentation for re-added liabilities
• Ensure timely reporting to avoid interest exposure

Conclusion

The introduction of a dedicated “Rejected Records” tab in the IMS Dashboard reflects GSTN’s continued commitment to enhancing technology-driven compliance. By providing a consolidated view of rejected Credit/Debit Notes requiring liability re-addition, the system significantly reduces compliance friction and improves reporting transparency.

Disclaimer:

This publication contains information for general guidance only. It is not intended to address the circumstances of any particular individual or entity. Although the best of endeavour has been made to provide the provisions in a simpler and accurate form, there is no substitute to detailed research with regard to the specific situation of a particular individual or entity. We do not accept any responsibility for loss incurred by any person for acting or refraining to act as a result of any matter in this publication.