Background:
Section 9(5) of the CGST Act, 2017 empowers the Government to notify categories of services on which the tax on intra-State supplies shall be paid by the electronic commerce operator (ECO) through which such services are supplied, as if the ECO were the supplier. Notification No. 17/2017-Central Tax (Rate) dated 28.06.2017 notifies such services, namely (i) passenger transport by radio-taxi, motor cab, maxi cab, motor cycle, omnibus or any other motor vehicle, (ii) accommodation in hotels, inns, guest houses, etc. by persons not liable for registration, (iii) house-keeping services such as plumbing and carpentering by persons not liable for registration, and (iv) restaurant services (other than at specified premises).
On the recommendations of the 56th GST Council, Notification No. 17/2025-Central Tax (Rate) dated 17.09.2025 inserted clause (v) with effect from 22.09.2025: “services by way of local delivery except where the person supplying such services through electronic commerce operator is liable for registration under sub-section (1) of section 22 of the Central Goods and Services Tax Act, 2017”. Simultaneously, local delivery services were taxed at 18% under S. No. 12(iii) of Notification No. 11/2017-Central Tax (Rate). The use of the undefined expression “local delivery” gave rise to doubts regarding inter-city and other delivery models operated through platforms, and the 18% rate on gig-worker delivery was considered burdensome.
The 57th GST Council recommended (para C2(2) of the Press Release) bringing delivery services, other than courier and postal services, supplied through an ECO under Section 9(5) where the person supplying such services is not liable for registration under Section 22(1), and prescribing a GST rate of 5% without ITC for such delivery services. The FAQs (Q. 15 and Q. 16 on services) clarify that where the delivery service provider is not liable to be registered, the ECO is liable to pay GST at 5% without ITC under Section 9(5), and where the delivery service provider is liable to be registered, the tax is payable by the provider itself at 5% without ITC. The Council has also recommended (para 18(2) of the Press Release) an amendment in Section 9(5) itself to provide clarity regarding the liability of the ECO irrespective of the business model followed by it, which would be carried out through the Finance Bill.
What the Notification provides:
Now, the CBIC vide Notification No. 09/2026-Central Tax (Rate) dated 27.10.2026 (G.S.R. 945(E)), issued under Section 9(5) of the CGST Act, 2017 on the recommendations of the GST Council, has amended Notification No. 17/2017-Central Tax (Rate) dated 28.06.2017 by substituting clause (v) as under:
“(v) Delivery services, other than postal and courier services, except where the person supplying such services through electronic commerce operator is liable for registration under sub-section (1) of section 22 of the Central Goods and Services Tax Act, 2017.”
| Clause (v) from 22.09.2025 to 31.10.2026 | Clause (v) w.e.f. 01.11.2026 | |
| Services notified under Section 9(5) | Services by way of local delivery, except where the supplier through the ECO is liable for registration under Section 22(1) | Delivery services, other than postal and courier services, except where the supplier through the ECO is liable for registration under Section 22(1) |
| Rate (Notification No. 11/2017-CT(R), S. No. 12(iii)) | 9% CGST (18% GST), with ITC | 2.5% CGST (5% GST), without ITC (vide Notification No. 06/2026-Central Tax (Rate)) |
The three changes of substance are: (a) the scope is widened from “local delivery” to “delivery services” generally, so that intra-city and inter-city delivery of parcels, documents, food, groceries and other goods arranged through a platform are all covered; (b) postal and courier services are expressly excluded, so that courier agencies and the Department of Posts continue to discharge tax on their own supplies at 18%; and (c) the carve-out for delivery service providers who are themselves liable for registration under Section 22(1) continues, in which case the provider, and not the ECO, is liable (at 5% without ITC under the amended S. No. 12(iii)).
Corresponding amendments have been made vide Notification No. 09/2026-Integrated Tax (Rate) dated 27.10.2026 (G.S.R. 946(E)) in Notification No. 14/2017-Integrated Tax (Rate) (with reference to registration under Section 20(v) of the IGST Act read with Section 22(1) of the CGST Act) and vide Notification No. 09/2026-Union Territory Tax (Rate) dated 27.10.2026 (G.S.R. 947(E)) in Notification No. 17/2017-Union Territory Tax (Rate).
Effective date:
The Notification comes into force with effect from 1st November, 2026, in tandem with Notification No. 06/2026-Central Tax (Rate), which prescribes the 5% rate without ITC for such delivery services from the same date. ECOs will accordingly discharge the liability under Section 9(5) at 5% for delivery services with time of supply on or after 01.11.2026.
Key takeaways for taxpayers and the industry:
- Food delivery, quick commerce and hyperlocal platforms: Liability under Section 9(5) for delivery services performed by unregistered delivery partners is retained but the rate falls from 18% to 5%. As clarified for restaurant services (Circular No. 167/23/2021-GST dated 17.12.2021), the ECO must pay the Section 9(5) liability in cash without utilising ITC, report it in Table 3.1.1(i) of FORM GSTR-3B, and is not required to reverse its own ITC on account of such liability; the delivery charges collected from customers should be invoiced by the ECO as supplier.
- Registered delivery fleets and logistics companies on platforms: Where the delivery partner is itself liable for registration (aggregate turnover above the threshold), it continues to be the supplier and pays 5% without ITC on delivery services supplied through the ECO; the ECO will instead collect TCS under Section 52 on such supplies. Fleet operators should evaluate the impact of the ITC restriction (vehicles, fuel, maintenance) under the 5% rate.
- Courier and postal services: Expressly outside Section 9(5); courier agencies continue to pay 18% on forward charge with full ITC, even when bookings are made through aggregator platforms.
- Inter-State supplies: The IGST counterpart covers inter-State delivery services, so inter-city deliveries by unregistered gig workers through platforms are also covered at 5%.
- Invoicing and e-commerce reporting: ECOs must issue tax invoices for Section 9(5) supplies, report them in Table 14/15 of FORM GSTR-1 as applicable, and revisit the configuration of their systems for the new rate and the wider scope of “delivery services” from 01.11.2026.
Similar notifications have been passed under the Integrated Goods and Services Tax Act, 2017 (“the IGST Act”) and the Union Territory Goods and Services Tax Act, 2017 (“the UTGST Act”).
The Notification can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2026/10/N.-No.-09-2026-CT-UT-IG-Rate.pdf
