Background:
Under Section 24(ix) of the CGST Act, 2017, a person supplying goods through an electronic commerce operator (ECO) who is required to collect tax at source under Section 52 must obtain registration irrespective of turnover. Further, GST registration is State-specific and requires a principal place of business in the State from which supplies are made. Small online sellers who wished to store inventory in the fulfilment centres/warehouses of ECOs located in other States were therefore required to obtain a registration in each such State, which in turn required them to have a place of business of their own in that State. In the absence of any physical presence, applications declaring the ECO’s warehouse as the place of business were frequently rejected or subjected to prolonged verification, restricting small sellers from expanding across States through e-commerce platforms.
The GST Council in its 56th meeting had given in-principle approval to a simplified registration mechanism for small sellers on ECO platforms. Earlier, vide Notification No. 18/2025-Central Tax, Rule 14A (optional simplified registration for applicants whose output tax liability on supplies to registered persons does not exceed ₹2.5 lakh per month, with automatic grant of registration) was inserted with effect from 01.11.2025.
In continuation, the 57th GST Council (08.10.2026) recommended insertion of Rule 14B in the CGST Rules, 2017, to provide a simple mechanism of registration for small suppliers making supplies of goods through ECOs in States/UTs where they do not have physical presence and where they intend to pass on ITC of not more than ₹2.5 lakh per month (excluding stock transfers between distinct persons), by declaring the warehouse of an ECO in that State/UT as their principal place of business, with registration to be granted automatically by the system subject to conditions.
What the Notification provides:
Now, the CBIC vide Notification No. 05/2026-Central Tax dated 26.10.2026 [Central Goods and Services Tax (Amendment) Rules, 2026] has inserted new Rule 14B – “Option for suppliers supplying goods through electronic commerce operator who are required to collect tax at source under section 52” – in the CGST Rules, 2017. The key features are:
- Eligibility [Rule 14B(1)]: A person registered in a State/UT under Rule 9 (the “home State”, where he has physical presence) may obtain registration on the same PAN in any other State/UT where he has no physical presence, by declaring a warehouse of an ECO (liable to collect TCS under Section 52) in that State/UT as his principal place of business, subject to three conditions – (a) he intends to supply goods through such ECO; (b) the total output tax liability (CGST + SGST/UTGST + IGST) on supplies to registered persons, other than persons registered on the same PAN, does not exceed ₹2.5 lakh per month; and (c) the ECO consents to the declaration of its warehouse as the principal place of business.
- Application [Rule 14B(2) and (3)]: The application is to be filed in FORM GST REG-01 (substituted by this Notification, with a new field 4.2 for opting under Rule 14B) declaring the home-State GSTIN, the address and particulars of the ECO warehouse to be declared as principal place of business, and of any other warehouse of the same or another ECO in that State/UT as additional place of business.
- ECO consent [Rule 14B(4) and (5)]: The application is forwarded to the concerned ECO for consent. The ECO may consent within seven working days; where consent is not given within that period, the application shall not be processed further.
- Verification in the home State [Rule 14B(6) to (12)]: On receipt of ECO consent, the application is forwarded to the jurisdictional officer of the home State for biometric-based Aadhaar authentication and document verification (if not already done), followed by physical verification of the principal place of business in the home State (if not already done). On successful completion, registration is granted electronically. Failure to complete Aadhaar authentication means the application is not processed further; if physical verification reveals that no business is conducted in the home State, the application is deemed rejected and intimated in new FORM GST REG-05A. Where the officer fails to carry out physical verification within 30 days of generation of ARN (after successful Aadhaar authentication and document verification), the application is deemed approved. Where the home-State registration was already granted after Aadhaar authentication, document verification and physical verification, registration under Rule 14B is granted electronically on receipt of ECO consent.
- Registration certificate [Rule 14B(14)]: The certificate will show the ECO warehouse(s) declared as principal/additional place of business along with the address of the principal place of business in the home State.
- Interplay with Rule 14A [Rule 14B(15)]: A person registered in the home State under Rule 14A must first withdraw from that option by filing FORM GST REG-32 before applying under Rule 14B.
- Amendments [Rule 14B(16) to (19)]: Change of warehouse address is to be applied in FORM GST REG-14 and is subject to fresh ECO consent; where the ECO withdraws consent, it must intimate the withdrawal on the common portal, and the registered person has 30 days to file REG-14 to change the principal/additional place of business. Other changes in the certificate stand amended on submission of REG-14 under Rule 19.
- Records and compliance [Rule 14B(20) to (22)]: The registered person must produce books of accounts/records under Rule 56 on demand and, notwithstanding Rule 56(7), must keep and maintain them at the principal place of business in the home State for each registration obtained under this rule. The ECO must appoint an authorised representative in each State/UT to arrange and provide information required from persons registered under this rule.
- Deemed cancellation [Rule 14B(23) and (24)]: If the ECO withdraws permission for a warehouse declared as additional place of business and no amendment is filed within 30 days, the place is deleted from the certificate. The registration is deemed cancelled by the common portal (intimated in new FORM GST REG-38) where (i) the ECO withdraws permission for the warehouse declared as principal place of business, or the ECO’s registration (including its TCS registration) is cancelled, and no amendment is filed within 30 days; (ii) the home-State registration is cancelled; or (iii) the ECO’s application for change of the warehouse address is approved and the registered person fails to file the consequential amendment within 30 days. Provisions of Rule 20(14) to (20) relating to change in the effective date of cancellation apply mutatis mutandis.
- Withdrawal from the scheme [Rule 14B(25) and (26)]: A person may withdraw from the option by filing FORM GST REG-32 along with details of a principal place of business as proof of physical presence; the procedure under Rule 14A(5) to (13) applies mutatis mutandis.
- Other conditions [Rule 14B(27) to (29)]: No requirement to display the registration certificate/GSTIN on a name board at the ECO warehouse; a person who has not opted for Aadhaar authentication (other than persons notified under Section 25(6D)) is not eligible; and only one registration under Rule 14B can be obtained against a PAN in a State/UT.
Effective date:
Rule 14B comes into force on 1st November, 2026. Small sellers should check the ₹2.5 lakh per month B2B output tax threshold, obtain the ECO’s prior concurrence, and ensure that biometric Aadhaar authentication and physical verification in the home State are complete, as these are pre-conditions for the automatic grant of registration in the other State/UT.
The Notification can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2026/10/CBIC-NN-05-2026–Central-Tax.pdf
