Author: admin_gst

Zero-rated turnover follows the export invoice and removal period, while actual export remains mandatory for refund entitlement.
Notes
GST
Rule 89(4) attributes the value of zero-rated goods to the refund period in which export invoices are issued and goods are removed under bond or LUT, rather than the later period of physical export. Sections 12 and 31 support invoice-and-removal recognition of supply, while actual export remains essential to establish export status and sustain the refund. Shipping bills and export records verify the later export event and must correlate with relevant invoices. Where export is delayed or does not occur within the stipulated period, Rule 96A governs extensions, tax and interest consequences; a mismatch in invoice and physical-export dates alone does not exclude the value from zero-rated turnover.
TMI Updates – Highlights, quick notes, marquee, annotation, news, alerts

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

Ineligible input tax credit alone does not establish suppression; enhanced consequences require proof of intent to evade tax.
Notes
GST
Section 74 requires more than wrongful availment or utilisation of input tax credit: fraud, wilful misstatement, or suppression of facts with intent to evade tax must be alleged and proved. Under the former Explanation 2, suppression covered failure to declare legally required information or failure to provide information sought in writing, but did not remove the intent requirement. Disclosures in returns, annual reconciliations and portal filings materially weaken a non-declaration allegation. Mere audit detection or non-response to audit communications does not independently establish suppression, particularly where the notice did not plead that basis. Section 74 proceedings and enhanced penalties therefore require evidence of deliberate concealment, and appellate review cannot sustain a demand on a materially new allegation beyond the show cause notice.
TMI Updates – Highlights, quick notes, marquee, annotation, news, alerts

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

Input tax credit requires independent, reasoned assessment; supplier tax default alone cannot mechanically determine purchaser liability.
Case-Laws
GST
Input tax credit claimed by a purchasing dealer cannot be determined mechanically solely because registered suppliers allegedly failed to deposit tax. The proper officer must independently assess the purchaser's liability under the applicable provision, consider documentary material supporting supplies, hear the parties, and issue a reasoned speaking order. Findings that the purchaser's material supported the supplies and that fraud was not established remain undisturbed, while the merits of the credit claim remain open for lawful determination.
TMI Updates – Highlights, quick notes, marquee, annotation, news, alerts

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

Regular bail in fraudulent input tax credit allegations: continued investigation cannot justify prolonged pre-trial custody.
Case-Laws
GST
Regular bail in alleged fraudulent input tax credit claims may be granted despite continuing further investigation where no recovery or discovery remains, offences carry a limited maximum sentence, and are triable by a Magistrate. Expiry of the statutory period and proposed witness examinations alone do not warrant indefinite custody. Risks of evidence tampering or evasion can be managed through conditions under the triple test. Prolonged detention pending a trial likely to take time constitutes pre-trial punishment and conflicts with the principle that bail is the rule and jail the exception. Bail was granted subject to conditions securing participation and protecting evidence.
TMI Updates – Highlights, quick notes, marquee, annotation, news, alerts

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

Clean slate principle does not extinguish GST liabilities when a corporate debtor is sold as a going concern.
Case-Laws
GST
Clean slate principle does not extinguish GST liabilities when a corporate debtor is sold as a going concern in liquidation. Such a sale transfers identified assets and liabilities as a single package, preserves the corporate identity, and requires the purchaser or new management to assume pre-existing, current and moratorium-period liabilities. The statutory priority for distribution of realised liquidation assets does not apply to a going-concern sale. GST demand proceedings require fresh adjudication where no effective reply was filed and transfer-of-business liability requires consideration, subject to a 25% deposit of disputed tax and a detailed reply.
TMI Updates – Highlights, quick notes, marquee, annotation, news, alerts

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

Meaningful pre-decisional hearing is required before input tax credit blocking; inadequate notice invalidates Rule 86A action.
Case-Laws
GST
Rule 86A requires a meaningful pre-decisional opportunity before input tax credit is blocked. Where a claimant must produce records and substantiate the credit claim, a three-day notice is insufficient and reduces the hearing requirement to an empty formality. Administrative and quasi-judicial action must be right, just and fair, rather than arbitrary or oppressive; denial of fair hearing may render the action void from inception. The High Court quashed the blocking order and consequential actions, directed unblocking of the credit, and permitted fresh action only after an adequate opportunity to produce records and be heard.
TMI Updates – Highlights, quick notes, marquee, annotation, news, alerts

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

Belated ITC-03 compliance requires fresh consideration of composition levy eligibility and may affect consequential GST tax proceedings.
Case-Laws
GST
Belated filing of Form ITC-03 requires consideration when determining a taxpayer's eligibility for the composition levy under Section 10 read with Rule 3. Denial based solely on non-filing, particularly where the taxpayer's reply was not considered, should be reassessed after taking subsequent compliance and the taxpayer's response into account. Acceptance of composition eligibility may affect consequential tax proceedings under Section 74, while collection and payment of composition tax may continue without prejudice to the tax authorities' rights.
TMI Updates – Highlights, quick notes, marquee, annotation, news, alerts

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

GST collected but not remitted attracts Section 76 penalty even where registered suppliers issued valid invoices.
Case-Laws
GST
Section 76(1) applies to every person who collects an amount as representing GST and does not pay it to the Government, without limiting its scope to unauthorised collections or unregistered persons. A registered supplier that collects GST through valid invoices but files nil or no returns and fails to remit the collection falls within the provision, regardless of whether the underlying supplies are taxable. The prescribed penalty equals the tax collected and not remitted. On that basis, the appellate deletion of penalty was reversed and the penalty restored.
TMI Updates – Highlights, quick notes, marquee, annotation, news, alerts

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

Input tax credit claims require documentary proof, while delayed supplier payment triggers reversal, interest and statutory minimum penalties.
Case-Laws
GST
Input tax credit eligibility rests on the claimant, who must substantiate invoices, supplier payment, transport or goods receipt, and supplier ledger evidence. Retrospective cancellation of a supplier's registration alone remains unresolved as a basis for denying credit. Where credit is inadmissible, consequential interest requires quantification by the proper officer. Failure to pay a supplier within 180 days requires reversal or addition of equivalent credit to output tax liability with interest; unavailable FORM GSTR-2 does not remove that liability, and later payment permits re-availment without extending the deadline. Statutory minimum penalties apply separately under Central and State enactments and aggregate under the integrated tax regime.
TMI Updates – Highlights, quick notes, marquee, annotation, news, alerts

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

GST refund limitation runs from return filing, and neither delay condonation nor absence of unjust enrichment revives claims.
Case-Laws
GST
GST refund claims for tax paid at an excess rate must be made within the statutory two-year limitation period. Where excess GST was reported and paid through a GSTR-3B return, limitation runs from the relevant return filing and payment date, not from later discovery of the payment error. Neither the Proper Officer nor the appellate authority has an enabling power to condone delay or grant a refund after limitation expires. Absence of unjust enrichment does not cure a time-barred claim because direct refund provisions apply only to refunds otherwise admissible under the statutory scheme.
TMI Updates – Highlights, quick notes, marquee, annotation, news, alerts

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

Section 74 requires proven intent to evade; delayed GST returns alone require liability consideration under Section 73.
Case-Laws
GST
Section 74 applies only where unpaid or short-paid GST is attributable to fraud, wilful misstatement, or suppression of facts with intent to evade tax, supported by material on record. Delayed filing of returns alone does not satisfy those conditions where the subsequently filed returns correctly disclose turnover and tax liability, no material information remains undeclared, and tax with applicable interest has been paid before proceedings begin. Where Section 74 is inapplicable, liability may still require determination under Section 73 read with Section 75(2) by the original adjudicating authority within the statutory time limit.
TMI Updates – Highlights, quick notes, marquee, annotation, news, alerts

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

GSTR-2A/GSTR-3B mismatch cannot defeat timely prior-year input tax credit without invoice-wise verification and reasoned appellate consideration.
Case-Laws
GST
For the disputed period, a year-wise GSTR-2A/GSTR-3B mismatch alone could not sustain denial of input tax credit where omitted prior-year credit was claimed within the statutory time and could be verified invoice-wise. GSTR-2A operated as a facilitative statement, and no independent ineligibility of the reflected credit was alleged. A reasoned appellate order must address material grounds, state the points for determination, and provide reasons even where the appellant does not appear. Certification requirements for supplier-side invoice mismatches did not apply where the discrepancy arose solely from comparing current-year GSTR-3B with current-year GSTR-2A, without any supplier reporting default. The disputed ITC demand, related interest, and penalty were quashed.
TMI Updates – Highlights, quick notes, marquee, annotation, news, alerts

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

Zero-rated turnover includes export invoices issued during the refund period despite later shipment when actual export is proved.
Case-Laws
GST
For refund under Rule 89(4), turnover of zero-rated supplies includes invoices issued during the relevant period for goods cleared for export under bond or letter of undertaking. A later actual-export date in the shipping bill does not remove those invoices from the relevant period's zero-rated turnover, provided the exporter establishes that the goods were actually exported. Refund of accumulated input tax credit remains admissible on that basis.
TMI Updates – Highlights, quick notes, marquee, annotation, news, alerts

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

Pure legal grounds and compliant job-work documentation limit GST detention where no taxable supply or contravention is established.
Case-Laws
GST
Pure questions of law arising from facts already on record may be raised as additional grounds where necessary to determine tax liability. Amendments to Section 129 affecting the amount payable for release do not remove the proper officer's detention power; reliance on the pre-amended release provision is erroneous but does not itself make detention proceedings void from inception. Goods returned after job work may move without tax where the e-way bill and delivery challan identify job work and contain prescribed particulars. Absence of IGST, without a charging provision or taxable supply, does not by itself establish a contravention supporting detention.
TMI Updates – Highlights, quick notes, marquee, annotation, news, alerts

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

Section 74 penalties require proven fraud, wilful misstatement or suppression, not mere return non-disclosure or audit payment.
Case-Laws
GST
Section 74(1) penalties for reverse-charge tax and input tax credit defaults require fraud, wilful misstatement, or suppression of facts causing the tax or credit lapse. Non-disclosure of supplies in returns, payment after audit verification, and accounting entries do not, without more, establish or disprove those conditions. Proper-officer satisfaction must rest on foundational facts rather than mechanical reliance on return discrepancies. Explanations for delayed reverse-charge payments and input tax credit not reversed on written-off vendor liabilities remain material to whether there was an intention to evade tax.
TMI Updates – Highlights, quick notes, marquee, annotation, news, alerts

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

Reasoned quasi-judicial orders require consideration of evidence; failure to assess GST exemption documents requires fresh determination.
Case-Laws
GST
Reasoned quasi-judicial orders must consider material documentary evidence and disclose reasons for accepting or rejecting it. The GST exemption claim for rail transportation of hatching eggs was rejected on the basis that supporting evidence had not been furnished, despite acknowledged written submissions showing that relevant documents were filed before the First Appellate Authority. Non-consideration of that material and the absence of reasons for rejecting it rendered the appellate order unsustainable. The order was set aside and remitted for a fresh, reasoned determination after considering the explanations and supporting documents; exemption eligibility remained undecided on merits.
TMI Updates – Highlights, quick notes, marquee, annotation, news, alerts

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

Ground-clearance measurement: laden standards governed pre-amendment vehicle cess classification, while Revenue bore the burden of proving higher-rate eligibility.
Case-Laws
GST
Pre-substitution Entry 52B required ground clearance to be understood through vehicle type-approval standards, which measured it in the fully laden condition because the entry prescribed neither a definition nor a measurement method. The later unladen-ground-clearance requirement expanded the higher-cess vehicle class and operated prospectively from 26 July 2023. For earlier supplies, statutory test certificates showing below-threshold laden clearance prevailed over unsupported online specifications; Revenue bore the burden of proving higher-rate classification. Dealers nevertheless had to self-assess tax on independent outward supplies. Because Revenue did not segregate or prove liability for post-amendment supplies, the differential cess demand and consequential interest and penalty were set aside.
TMI Updates – Highlights, quick notes, marquee, annotation, news, alerts

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

Statutory GST notice and personal hearing remain essential before adverse reverse-charge demands, while unnotified catering cannot trigger reverse charge.
Case-Laws
GST
GST adjudication under Section 73 requires a statutory show-cause notice; Form GST DRC-01 under Rule 142(1) must accompany, not replace, that notice. A final audit report or demand summary lacking the grounds of demand does not cure this substantive defect under Section 160. Section 75(4) also requires a personal hearing before an adverse decision, notwithstanding delayed submission of a reply. An appellate authority cannot sustain a demand on new reverse-charge or forward-charge grounds without notice and opportunity. Reverse charge on office-meal expenses requires proof of the applicable charging provision, taxable supply, value and liable person; outdoor catering is not a notified service under Section 9(3).
TMI Updates – Highlights, quick notes, marquee, annotation, news, alerts

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

Question of law in GST documentary discrepancy appeals requires Division Bench consideration where statutory interpretation is involved.
Case-Laws
GST
GST appellate jurisdiction requires Division Bench consideration where an alleged documentary discrepancy during inter-State movement of goods raises statutory interpretation rather than only factual verification. The issues include documents required to accompany goods, conditions for detention and penalty proceedings, and the legal effect of a Circular relied upon at first appeal. Because these matters concern the scope and application of GST requirements, they constitute a question of law, requiring a hearing on merits by a Bench comprising Judicial and Technical Members.
TMI Updates – Highlights, quick notes, marquee, annotation, news, alerts

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

Pure-service exemption for municipal sanitation manpower requires an identifiable qualifying municipal-function supply, leaving non-exempt outsourcing taxable at applicable rates.
Case-Laws
GST
Pure-service exemption for municipal sanitation manpower depends not merely on designations such as Sweeper or Paryavaran Mitra, but on contractual scope, actual deployment, supporting records, supply to the specified recipient, and a connection with qualifying municipal functions. Recipient views, contractual GST clauses, and past tax practice do not determine taxability. The manpower outsourcing arrangement lacked contractual and factual segregation of a separately identifiable qualifying supply and was therefore not exempt. Non-exempt outsourcing is taxable under the applicable service classification; the intra-State supply attracted 18% GST, subject to classification and rate-notification verification.
TMI Updates – Highlights, quick notes, marquee, annotation, news, alerts

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

Advisory – Scheduled Maintenance of e-Invoice Services (31 October – 1 November 2026)
GST
Dated:- 29-10-2026

Dear Taxpayers,

Due to a scheduled infrastructure upgrade, certain e-Invoice-related services on the GST portal (https://einvoice.gst.gov.in) would remain temporarily unavailable during the following period:

Start: 31 October 2026, 9:00 AM (IST)

End: 1 November 2026, 1:00 PM (IST)

Affected services:

1. e-Invoice data retrieval and processing from IRPs.

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

Economic Resilience, Thinner Buffers, Emerging Risks Globally: Where Does India Stand?[1] – Address by Dr. Poonam Gupta, Deputy Governor, Reserve Bank of India, at the Business Standard BFSI Insight Summit
GST
Dated:- 29-10-2026

It is a pleasure to be back at the Business Standard BFSI Insight Summit. When I spoke here last year, my theme was the macroeconomic resilience of emerging markets (EMs), including India, which I attributed to the sound policy frameworks that these economies have adopted and adhered to.

A year on, the resilience of the world economy has held. In today's talk, I will reflect on the latest global outlook drawing on the recent publications of the IMF, how India is placed in this global context, and what policy priorities may be warranted for other EMs as well as India at this point in time.

My observations are in four parts, one each on growth, inflation, public finances and the financial sector.

1. Growth rates seem resilient across countri

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ojection has been raised by 1.4 percentage points, along with smaller upgrades in Europe, including Germany (0.6 percentage point). The projection for the United States is unchanged at 2.3 per cent.^3 Second, the projection for emerging market and developing economies (EMDEs) has been marginally lowered by 0.1 percentage point to 3.7 per cent (Chart 1).^4 Third, the projection for India in 2026-27 has been upgraded by 0.6 percentage point to 7.0 per cent.

What explains this resilience? WEO attributes it to “a combination of circumstantial and institutional factors as well as offsetting forces”.

The first set is circumstantial, starting with the financial cushions that households and firms built up in earlier years. The large fiscal support during the pandemic cushioned their finances, and many had shifted to longer-term borrowing at fixed rates while interest rates were low, which has shielded them from the recent rise in rates. In 2025, financial conditions were accommodative an

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

d GDP has fallen by about a third over the past two decades. All this has reduced the impact of the near closure of the Strait of Hormuz. The IMF estimates that the closure will take 0.3 percentage point off global growth in 2026, against 0.9 percentage point had oil supply been less flexible and energy use less efficient.^5

Investment in AI has also supported growth. Large investments in data centres and computing equipment have boosted demand, well ahead of any visible gains in productivity. According to a recent IMF blog, AI could add about half a percentage point to annual world growth over the next decade.^6 These gains, however, may take time and are likely to be unevenly distributed across countries.

The risks to the outlook are seen as tilted to the downside. These include a prolonged or wider conflict in West Asia and Ukraine, which would push commodity prices higher; a reassessment of the expected gains from AI, whose supply chain is highly concentrated; extreme weather

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

out, was registered at 7.8 per cent, and was higher than expected. Growth was driven mainly by private consumption and fixed investment, with the latter growing by 11.9 per cent, its highest in the new GDP series.^7 Exports of goods and services grew by 12.0 per cent in real terms, as merchandise exports picked up and services exports stayed strong. On the supply side, manufacturing grew by 9.2 per cent and services by 9.7 per cent. Growth is not just high but balanced as well.

The economic momentum seems to have carried into July-September. Gross goods and services tax (GST) collections rose by more than 14 per cent in each month of the quarter. Industrial output was up 8.0 per cent in August. Merchandise exports have grown at double-digit rates for six months running, by 23.0 per cent in September. Both the manufacturing and the services Purchasing Managers' Indices (PMIs) were above 55 in September. Bank credit grew by 19.4 per cent year on year as on September 30, and retail au

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ially broad-based, diversified and underpinned by rising productivity, and it draws on domestic consumption as well as exports.^9 As a result, even when particular sectors are hit by specific shocks, large parts of the economy remain relatively insulated. This stands in contrast to economies that rely on a narrower set of growth drivers, such as natural resources, agriculture, external demand rather than domestic markets, or remittances from outward migration, or that face unfavourable demographics.

Second, India's policy frameworks have improved, and so has their implementation, with a firm focus on macroeconomic and financial stability. The Fiscal Responsibility and Budget Management framework has anchored fiscal consolidation within a rules-based path; GST has unified the indirect tax system; flexible inflation targeting, adopted in 2016, has lowered both the level and the volatility of inflation; and banking regulation and supervision have been considerably strengthened.

Thir

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

nsumption. At the same time, there was no attempt to stimulate demand beyond the economy's productive capacity, and fiscal consolidation has stayed on track.^10

2. Higher inflation across countries, resulting in tighter monetary policy

WEO projects global headline inflation at 4.7 per cent in 2026, up from 4.1 per cent in 2025, and expects it to ease back to 4.1 per cent in 2027. Inflation in 2026 is projected to be above its pre-pandemic (2000-19) average of 3.9 per cent, though below the 2022-25 average of 6.3 per cent.

Three factors are shaping the inflation outlook. The first is the re-escalation of the conflict in West Asia, which has pushed up the prices of energy and other commodities. The IMF now expects oil prices to average about US$96 a barrel in 2026, 16 per cent higher than it had assumed in April, and fertiliser prices to rise by 10 per cent. Higher costs of energy, fertilisers, transport and insurance are, in turn, projected to raise international food prices by

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

elies on imported energy, the weight of food in its consumption basket, and the strength of its domestic demand.

In AEs, in particular, inflation has been above their target in every year since 2022 (Chart 3).^11 The IMF projects it at 3.1 per cent in 2026 and 2.7 per cent in 2027, returning close to 2 per cent only from 2028. In EMDEs too, inflation, at 5.7 per cent in 2026, is projected to be at the upper end of the 3-6 per cent range of their targets.

For India, the IMF projects inflation to rise from 2.0 per cent in 2025-26 to 5.0 per cent in 2026-27, before moderating to 4.4 per cent in 2027-28.

The current situation of external shocks and the resultant growth-inflation outlook raises the following questions about how countries may conduct their monetary policy.

How should monetary policy respond to supply shocks, and distinguish temporary external price shocks from more persistent second-round effects? Are inflation-targeting frameworks adequately equipped to deal wit

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ng diffusion indices that measure the breadth of price pressures, the trajectory of wages, and inflation expectations.

At the same time, policy makers may not always have the luxury of waiting for these effects to fully materialise and may instead take pre-emptive actions. The IMF has emphasised that monetary policy “should remain firmly focused on price stability”, with a policy stance restrictive enough to bring inflation back to target in a timely manner and prevent second-round effects.^12

The flexibility built into inflation-targeting frameworks, including the tolerance band or an explicit or implicit mandate of growth or employment, has helped central banks adapt their response to the specific challenges and contexts. Central banks are communicating more and better. This has helped anchor expectations and preserve credibility despite not meeting the inflation targets for multiple years. The question, however, remains whether they can continue to anchor expectations for a mu

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

d overall macroeconomic stability.

As for AI, its overall implications for inflation and monetary policy are still being assessed. In the near term, the investment boom adds to demand, as noted earlier. Once AI raises productivity, it could lower costs and ease inflation, although inflation could pick up again later if higher demand comes to dominate. If it lifts investment demand and expected growth for a sustained period, it could also raise the neutral interest rate. And wider use of AI in pricing could allow firms to adjust prices more quickly, so that shocks pass through to inflation faster than in the past.^13

Central banks in emerging economies are generally guided by domestic growth and inflation conditions, and the specific monetary policy frameworks or inflation-targeting frameworks that they have put in place rather than by interest-rate differentials with AEs. There are hardly any central banks that incorporate external conditions or the exchange rate directly into th

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

e, depending on the evolving circumstances and the outlook”.^16 Inflation data for September, released after the policy meeting, were along expected lines: headline inflation rose to 5.5 per cent and core inflation to 4.3 per cent, so that the average for July-September, at 4.9 per cent, was the same as the MPC's projection for the quarter.

Over a longer period, India's record on inflation has been rather strong. Since the adoption of flexible inflation targeting in 2016, annual inflation has declined from the previous years' average, has become more stable, and has remained within the tolerance band of 2 to 6 per cent in all but two years (Chart 4). Even in those two years of exceptional external circumstances (Covid and the Russia-Ukraine war), it did not deviate too much from the upper limit, at 6.2 and 6.7 per cent, and declined subsequently.

3. Thinner buffers globally, especially fiscal, to respond to the current shock if it persists, or to address a new shock

The fiscal

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

nty years. This reflects several factors: the oil price shock, inflation that has proved persistent, stronger demand for investment, and expectations of faster growth from AI. Concerns about public finances have added to the pressure, given high debt, rising spending needs and the prospect of heavy bond issuance.^17

This brings us to the question of debt sustainability. Whether the debt ratios across countries rise or fall depends on two things: the primary deficit (non-interest expenditure in excess of revenue), and the gap between the interest rate a government pays on its debt and the growth rate of nominal GDP.

For the median advanced and emerging market economies, this gap was negative in every year from 2016 to 2025, except 2020. While remaining negative, it is projected to narrow over the next few years (Chart 6). As the gap narrows, governments will need to run smaller primary deficits to stabilise their debt ratios. Instead, the primary deficit is projected to rise from

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

solidation than currently envisaged under existing policies.” Indeed, among the nine emerging market economies with GDP above US$1 trillion, India is the only one whose debt ratio is projected to decline between 2025 and 2031.^19

So how sustainable is India's public debt? Sustainability can be assessed in different ways. One could assess the rollover risk, that is, whether the government may find it difficult or costly to refinance its maturing debt. Another is runaway risk, that is, whether the debt ratio may keep rising on its own momentum, because the interest rate on debt exceeds the growth rate of the economy. India has neither. Most of the public debt is long term, is denominated in local currency, and is held domestically (a large part of which is held by institutional investors), which limits rollover risk. And a favourable growth and interest-rate differential, along with fiscal consolidation, has put the debt ratio on a declining path.

Fiscal consolidation has also been

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

l per cent over time.

4. Financial sector has held up well globally, but could face shocks

With the changing global order and rapid transformation of the financial systems, safeguarding financial stability has become an ever more compelling priority. The Global Financial Crisis (GFC) of 2007-09 showed that financial instability can cost dearly in terms of economic growth, fiscal backstop, and rebuilding trust. The reforms that followed have strengthened bank regulation, supervision and risk management, and the capacity of banks to absorb shocks. As a result, the banking sector has become much more resilient. For the largest internationally active banks, the average common equity Tier 1 capital ratio nearly doubled, from 7.1 per cent in June 2011 to 13.3 per cent at the end of 2021. According to the Basel Committee's evaluation, systemic risk declined after the reforms, with no considerable evidence of adverse effects on bank lending.^21

The post-GFC reforms have strengthened t

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ee topical risks: a fall in the prices of AI-related assets, if investment and profits in AI prove weaker or less durable than expected; a sharp increase in sovereign bond yields, from renewed inflation or concerns about public finances; and cyber threats, which are becoming a systemic risk as financial services grow more digital and interconnected.

GFSR notes, these “could be near-term catalysts for a sharp tightening of financial conditions and market turmoil”. Their impact could be amplified by leverage, concentrated exposures and liquidity mismatches, particularly among non-bank financial institutions. This could test the resilience of the global financial system at a time when policy space is narrowing. The overall assessment is that while financial markets have been resilient, risks to financial stability remain elevated.^22

The GFSR therefore calls for containing excessive leverage, bringing public debt onto a sustainable path, preserving the capital and liquidity buffers

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ion, through a revised Prompt Corrective Action framework and scale-based regulation of non-banking financial companies (NBFCs).^23 Countercyclical measures were undertaken too, as warranted (e.g. in November 2023, when regulatory measures on consumer credit and bank credit to NBFCs were implemented).

The resilience of the Indian financial system is now amply evident: capital adequacy is 17.7 per cent, the common equity Tier 1 ratio is 15.3 per cent, and the liquidity coverage ratio is about 124 per cent. The gross non-performing asset (NPA) ratio of scheduled commercial banks has declined from 11.6 per cent in March 2018 to 1.8 per cent in March 2026, a multi-decadal low.

RBI's stress tests reinforce this assessment. The June 2026 Financial Stability Report included adverse scenarios built around a prolonged and wider geopolitical conflict. Even under the most severe scenario, the capital adequacy of the 46 major banks would remain at about 13 per cent by March 2028, well above

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

beyond the central bank and requires coordinated action by all financial regulators and the government. India's inter-agency framework serves this purpose. The Financial Stability and Development Council, chaired by the Finance Minister, and its Sub-Committee, chaired by the RBI Governor, provide an institutional platform for the government, the RBI and all financial sector regulators to exchange information, assess systemic risks and coordinate policy responses to safeguard financial stability.

India's financial resilience thus rests on several factors: healthy balance sheets, a strong regulatory framework that balances risk management with economic growth, supervision that is risk-based and makes good use of technology, countercyclical policies to prevent vulnerabilities from building up during periods of rapid growth, a broad regulatory perimeter that helps limit regulatory arbitrage, stress tests to assess the vulnerability to envisaged shocks, and all-encompassing forums to di

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

wing costs. Global public debt is heading above 100 per cent of GDP, bond yields have risen sharply, and EMDEs face costlier funding and more volatile capital flows.

Let me bring these threads together for India. On growth, India stands out. It is the fastest-growing large economy, and unlike the EMDE aggregate, its growth projection has been revised up over the past year. That growth has rested more on domestic sources lately, particularly private consumption and public investment, but new drivers have emerged, including private investment and merchandise exports. The ballpark estimate that most agencies have for the next few years is 7 per cent or thereabouts. With some of the conditions normalising, and with continued policy attention, one could envisage growth moving up from 7 per cent towards 8 per cent.

India's track record on inflation over the last ten years has been equally credible. Since the adoption of flexible inflation targeting, inflation has declined structurally,

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ed, public debt is on a declining path and the financial system is sound.

References

Bank for International Settlements (2024), “Artificial Intelligence and the Economy: Implications for Central Banks”, Chapter III, Annual Economic Report 2024, June.

Bank Indonesia (n.d.), “Monetary Policy”, Bank Indonesia website.

Basel Committee on Banking Supervision (2012), Results of the Basel III Monitoring Exercise as of 30 June 2011, April.

Basel Committee on Banking Supervision (2022a), Basel III Monitoring Report, September.

Basel Committee on Banking Supervision (2022b), Evaluation of the Impact and Efficacy of the Basel III Reforms, December.

Basel Committee on Banking Supervision (2026), Regulatory Consistency Assessment Programme: Basel III Adoption Progress Summary, September.

Bolhuis, M., A. Roy, P. Schneider and Z. Zhang (2025), “Good Policies (and Good Luck) Helped Emerging Economies Better Resist Shocks”, IMF Blog, October 6.

Dabla-Norris, E. and R. Vald&ea

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

3.

International Monetary Fund (2025), World Economic Outlook, October.

International Monetary Fund (2026a), “Taxing Better to Boost Growth”, Chapter 1, Fiscal Monitor, October.

International Monetary Fund (2026b), Fiscal Monitor Database, October.

International Monetary Fund (2026c), Global Financial Stability Report, October.

International Monetary Fund (2026d), World Economic Outlook, April and October; World Economic Outlook Update, January and July; and World Economic Outlook and Historical Forecasts Database.

Malhotra, S. (2026), “Preserving Financial Stability in an Evolving World”, Special Address at the Fifth Kautilya Economic Conclave, October 3.

Ministry of Statistics and Programme Implementation (2026), “Press Note on New Series of Gross Domestic Product (GDP) Estimates with Base Year 2022-23”, Government of India, February 27.

Reserve Bank of India (2025), Review of Monetary Policy Framework: A Discussion Paper, August.

Reserve Bank of India (202

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ermany, Italy, Japan, the United Kingdom and the United States) and the euro area countries. The group includes Korea, Taiwan Province of China, Australia, Singapore, Switzerland, Sweden and Hong Kong SAR, among others.

^4 There are other regional variations too. Compared with July, the IMF has raised its 2026 projections for emerging and developing Asia, to 5.1 per cent, and sub-Saharan Africa, to 4.5 per cent; lowered them for emerging and developing Europe, to 1.7 per cent, Latin America and the Caribbean, to 2.3 per cent, and, most sharply, for the Middle East and Central Asia, where output is now projected to contract by 0.3 per cent.

^5 Some of these adjustments are likely to be more durable than others. Investment in alternative sources of energy and gains in energy efficiency will make economies less vulnerable to similar shocks in future. Others, such as drawing down inventories or sourcing energy from more distant suppliers, offer only temporary relief, and at a higher

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ilience Is Under Strain, Demanding Decisive Policy Action”.

^13 IMF (2026), World Economic Outlook, October; Bank for International Settlements (2024), Annual Economic Report, Chapter III, “Artificial Intelligence and the Economy: Implications for Central Banks”.

^14 Indonesia is a notable exception. Bank Indonesia is mandated to achieve rupiah stability, which covers both the prices of goods and services and the exchange rate of the rupiah. Bank Indonesia, “Monetary Policy”, website.

^15 Reserve Bank of India (2026), Resolution of the Monetary Policy Committee, October 5 to 7.

^16 Statement by Shri Sanjay Malhotra, Governor (2026), October 5 to 7, released October 21.

^17 Dabla-Norris and Valdés (2026), “Rising Sovereign Yields Raise the Fiscal Stakes”.

^18 India's general-government deficit narrowed from 9.2 per cent of GDP in 2022-23 to 7.4 per cent in 2025-26. In AEs and EMDEs, by contrast, fiscal deficits have widened since 2022, after declining from their

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

GST timing for Toll-Operate-Transfer concessions: concessionaires pay integrated tax when operation and maintenance expenses are charged to escrow accounts.
Notifications
GST
Concessionaires operating under Toll-Operate-Transfer concession agreements must pay integrated tax on operation and maintenance services supplied to the concessioning authority based on amounts charged or debited from the designated escrow account towards operation and maintenance expenses. Tax becomes payable in the tax period in which the relevant expenditure is charged or debited to that account. The procedure applies where the concessionaire has exclusive toll collection rights, must operate and maintain the road or highway during the concession period, and pays the concession fee upfront. It takes effect from 1 November 2026.
TMI Updates – Highlights, quick notes, marquee, annotation, news, alerts

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

Escrow-based Union Territory tax payment applies to Toll-Operate-Transfer concessionaires' operation and maintenance services from November 2026.
Notifications
GST
Registered concessionaires under Toll-Operate-Transfer concession agreements must pay Union Territory tax on operation and maintenance services supplied to concessioning authorities during the concession period. Tax is payable in the tax period when operation and maintenance expenditure is charged or debited to the escrow account maintained under the agreement. The arrangement covers agreements granting exclusive toll collection and appropriation rights for a road or highway, requiring upfront concession fees and operation and maintenance obligations. It takes effect on 1 November 2026.
TMI Updates – Highlights, quick notes, marquee, annotation, news, alerts

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

E-commerce operator GST liability covers delivery services, excluding suppliers required to obtain regular GST registration.
Notifications
GST
Electronic commerce operators must pay GST on intra-State supplies of delivery services other than postal and courier services, subject to a revised exclusion. The operator is not liable where the delivery-service supplier using the electronic commerce operator is required to register under the CGST Act's regular registration provision. This substitution of clause (v) in Notification No. 17/2017-Central Tax (Rate) takes effect from 1 November 2026.
TMI Updates – Highlights, quick notes, marquee, annotation, news, alerts

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =