In the Lok Sabha, Minister of State in the Ministry of Finance, Shri Pankaj Chaudhary, answered Unstarred Question No. 1178 on Monday, July 27, 2026/Shravana 5, 1948 (Saka), regarding the Apportionment and Settlement of IGST Revenue.
The Minister informed the House that the Goods and Services Tax Council, in its 54th meeting held in New Delhi on September 9, 2024, approved the constitution of a Committee of Officers on IGST Settlement.
Accordingly, a Committee comprising officers from the Central Government and various State Governments, including Kerala, was constituted to examine issues relating to the settlement of Integrated Goods and Services Tax revenue.
The Committee was mandated to recommend measures for improving the IGST settlement mechanism. Its scope included proposals for legislative amendments, system enhancements and refinements to the formula used for apportioning both positive and negative balances in the IGST account.
As one of its principal decisions, the Committee recommended a Standard Operating Procedure for addressing abnormal reversals of Input Tax Credit. Such reversals had been contributing to irregularities in the IGST settlement process.
The Committee also recommended alignment of ineligible credit and time-barred credit with the structure of Form GSTR-3B. As part of this exercise, STL 1.06, primarily relating to domestic ineligible credit, and STL 1.10, relating to ineligible credit on imports, were approved for merger. Similarly, STL 1.11 was approved for merger with STL 1.07.
Further, the Committee recommended incorporating the corresponding section numbers, rule numbers and sources in the relevant rules. It also proposed necessary clarifications in areas where the existing rules lacked precision.
The findings of the Committee of Officers were placed before the GST Council at its 55th meeting. Thereafter, with the approval of the GST Implementation Committee, the Goods and Services Tax Settlement of Funds Rules, 2026 were notified and published in the Gazette on March 30, 2026.
The newly notified rules incorporate the recommendations of the Committee of Officers and are aimed at strengthening the existing IGST settlement framework. The Standard Operating Procedure recommended by the Committee has also been implemented.
These measures are expected to improve consistency, transparency and accuracy in the apportionment and settlement of IGST revenue between the Centre and the States.
The Answer can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2026/07/LS-Apportionment-and-Settlement-of-IGST-Revenue-27.07.2026.pdf
