Archive · 23 Jan 2026
GSTN Advisory on RSP-Based Valuation of Tobacco Goods
The Goods and Services Tax Network (GSTN) has issued an advisory to clarify how tobacco products should be valued for tax purposes.
Starting from February 1, 2026, the tax on certain tobacco products will be based on the Retail Sale Price (RSP) shown on the package, not the actual selling price.
This change is to prevent tax evasion through discounts and promotions.
The advisory provides a workaround for businesses to report taxes correctly without causing system errors.
It affects manufacturers, importers, and distributors of tobacco products.
Experts say this clarification helps businesses comply with the new rules without facing technical issues.
GSTN issued an advisory clarifying RSP-based valuation for tobacco products effective February 1, 2026.
Tax liability for specified tobacco products will be based on the Retail Sale Price (RSP) declared on the package.
The advisory provides a reporting workaround to avoid system errors in e-invoicing, e-way bills, and return filings.
Businesses must report the net sale value in the taxable value field and compute tax based on the RSP.
The advisory aims to reduce compliance challenges and ensure smooth implementation of the new valuation regime.
- Who
- Tobacco manufacturers, FMCG companies, importers, wholesalers, distributors, ERP solution providers, and tax professionals
- What
- GSTN advisory on RSP-based valuation for tobacco goods
- When
- Effective from February 1, 2026
- Where
- India
- Why
- To address compliance challenges and ensure smooth system functionality
- Effective Date
- February 1, 2026
- Impacted Products
- Pan masala, unmanufactured tobacco, cigarettes, cigars, other manufactured tobacco products, and certain tobacco- or nicotine-based inhalation products
- HSN Codes
- 2106, 2401, 2402, 2403, 2404
- Reporting Workaround
- Report net sale value in taxable value field, compute tax based on RSP, and report total invoice value as sum of net sale value and RSP-derived tax
- Applicability
- Tobacco manufacturers, FMCG companies, importers, wholesalers, distributors, ERP solution providers, and tax professionals
- Penalties
- Incorrect application may invite demand, interest, and penalties
- Expert View
- Pragmatic and timely clarification to avoid technical mismatches and compliance disruption