Background:
Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 is the principal exemption notification for services (last amended vide Notification No. 16/2025-Central Tax (Rate) dated 17.09.2025). The 57th GST Council recommended a number of targeted exemptions and consequential changes in this notification, the background of which is as under:
- Helicopter passenger transport (para C2(5) of the Press Release): S. No. 15(a) exempts transport of passengers by air in economy class embarking from or terminating in an airport located in Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura or at Bagdogra in West Bengal. Helicopter services on seat-share basis, which are the mainstay of connectivity in the hill States, were however taxable at 5% (item (ivb) of S. No. 8 of Notification No. 11/2017-Central Tax (Rate), inserted from 10.10.2024). The Council recommended exempting passenger transport by helicopter on seat-sharing basis from/to airports and helipads in these States; the FAQs (Q. 1 to Q. 3) clarify that chartered helicopter services are not covered and that a helipad is covered within the scope of “aerodrome” under the Bharatiya Vayuyan Adhiniyam, 2024.
- Goods transport agency and ECO-supplied goods (para C2(2) of the Press Release): S. No. 21A exempts services provided by a GTA to an unregistered person (including an unregistered casual taxable person), other than to specified recipients. With delivery of goods ordered through ECOs being taxed at 5% without ITC (see Update 5), the Council recommended excluding from this exemption the GTA services in relation to goods which are supplied or ordered through an ECO, so that such transportation to unregistered consumers is uniformly taxable. The FAQs (Q. 12 to Q. 14 and Q. 17) clarify that GST at 5% without ITC or 18% with ITC will apply to such GTA services, that the GTA (and not the ECO) is liable to pay the tax, and that GTA services not in relation to ECO-ordered goods, and transportation by individual truck owners/operators, are unaffected.
- Storage or warehousing of seeds (para C2(6) of the Press Release): S. No. 24B exempts services by way of storage or warehousing of cereals, pulses, fruits and vegetables, and S. No. 54(e) exempts storage of “agricultural produce”. Seeds meant for sowing which have undergone processing (cleaning, grading, treatment, packing) were not always accepted as “agricultural produce”, leading to disputes on the taxability of warehousing of seeds by seed companies and cold storages. The Council recommended a specific exemption for storage or warehousing of seeds meant for sowing, irrespective of whether such seeds are covered by the definition of agricultural produce (FAQs Q. 40 to Q. 43).
- Seamen’s Provident Fund Organisation (para C2(8) of the Press Release): Services by the Employees’ Provident Fund Organisation (S. No. 31), the Coal Mines Provident Fund Organisation (S. No. 31A) and the National Pension System Trust (S. No. 31B) are exempt, but the Seamen’s Provident Fund Organisation (SPFO), which administers the Seamen’s Provident Fund Scheme under the Seamen’s Provident Fund Act, 1966, had no corresponding exemption. The Council recommended an exemption on the lines of EPFO and CMPFO (FAQ Q. 31).
- Toll-Operate-Transfer (TOT) concessions (para C2(11) of the Press Release): Under the TOT model, the NHAI and other authorities monetise operational highways by granting a concessionaire, against an upfront concession fee (and in some cases periodic payments), the exclusive right to demand, collect and appropriate toll for the concession period, along with the obligation to operate and maintain the highway. While toll charges collected from road users are exempt (S. No. 23), the grant of the right to collect toll by the authority to the concessionaire was treated as a taxable leasing/licensing service under Heading 9973 at 18%, resulting in a large upfront GST cost on highway monetisation. The Council recommended exempting the grant of exclusive right, licence and authority by the Government, local authority, governmental authority or government entity to the concessionaire to demand, collect and appropriate toll fee (FAQs Q. 18 to Q. 21).
- Curing of coffee (para C2(7) of the Press Release): S. No. 54(c) exempts processes carried out at an agricultural farm, including drying, cleaning, curing, sorting and grading, which do not alter the essential characteristics of agricultural produce. Coffee curing (hulling, cleaning, grading, polishing of raw coffee to make it marketable) is, owing to climatic and geographical considerations, ordinarily carried out at separate curing works and not at the farm, and was therefore denied the exemption. The Council recommended a specific exemption for curing of coffee provided by coffee curers to cultivators (FAQs Q. 35 to Q. 39).
- Consequential changes: With the restructuring of delivery services in the rate notification (Update 5), the Explanation inserted in S. No. 18 from 22.09.2025 (which carved out local delivery services provided by or through an ECO from the exemption for transport of goods by road other than by GTA/courier) and the exclusion of ECOs from the definition of “goods transport agency” in clause (ze) of paragraph 2 required rationalisation.
What the Notification provides:
Now, the CBIC vide Notification No. 07/2026-Central Tax (Rate) dated 27.10.2026 (G.S.R. 939(E)), issued under Sections 9(3), 9(4), 11(1), 15(5) and 148 of the CGST Act, 2017 on the recommendations of the GST Council, has made the following amendments in Notification No. 12/2017-Central Tax (Rate):
- No. 15 – new item (aa): After item (a), the following has been inserted: “(aa) air, in a helicopter on seat share basis, embarking from or terminating in an airport including a helipad located in the state of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura or at Bagdogra located in West Bengal”. Transport of passengers by helicopter on seat-share basis from/to such airports and helipads is thus exempt; chartered helicopter services and seat-share services outside these States continue at 5% without ITC under S. No. 8(ivb) of Notification No. 11/2017-Central Tax (Rate).
- No. 18 – Explanation omitted: The Explanation excluding local delivery services provided by or through an ECO from the exemption for transportation of goods by road (other than by GTA or courier agency) has been omitted, as delivery services are now specifically dealt with in the rate notification.
- No. 21A – new Explanation: After clause (f), the following has been inserted: “Explanation. – Nothing contained in this entry shall apply to services provided by a goods transport agency in relation to goods, where such goods are supplied through an electronic commerce operator.” GTA services for ECO-supplied goods to unregistered persons are thus taxable from 01.11.2026 at 5% without ITC or 18% with ITC under S. No. 9(iii) of Notification No. 11/2017-Central Tax (Rate), with the GTA liable to pay the tax.
- No. 24B substituted: “Services by way of storage or warehousing of cereals, pulses, fruits, vegetables, and seeds meant for sowing”. A new clause (zzca) has been inserted in paragraph 2 to define “seed” as any plant material, including seedlings, tubers, bulbs, rhizomes, roots, cuttings, all types of grafts, tissue culture plantlets and other vegetatively propagated material, used or intended for use in propagation or sowing, and includes (i) seeds of cereals, coarse cereals, pulses, oilseeds, fibre crops, forage and fodder crops, green manures, sugar crops; (ii) seeds of fruits, vegetables, spices, flower crops, ornamental crops and plantation crops; and (iii) planting material.
- New S. No. 31AA (Heading 9971 or 9991): “Services by Seamen’s Provident Fund Organisation to persons governed by the Seamen’s Provident Fund Act, 1966 (4 of 1966)” – Nil.
- New S. No. 42A (Heading 9973): “Services by way of grant of exclusive right of way or access, license and authority to demand, collect and appropriate toll fee by the Central Government, State Government, Union Territory, Local Authority, Governmental Authority or Government Entity” – Nil. The exemption covers the upfront concession fee as well as periodic payments made by the concessionaire for receiving such right (FAQ Q. 20), but not rights granted by a private entity (FAQ Q. 21).
- New S. No. 54A (Heading 9986): “Services by way of curing of coffee supplied to coffee cultivators” – Nil, with an Explanation that “curing” shall have the meaning assigned to it in clause (d) of Section 3 of the Coffee Act, 1942, i.e., application of mechanical processes, other than pulping, to raw coffee for the purpose of preparing it for marketing. The exemption applies whether the curing is carried out at the estate or at separate curing works (FAQ Q. 38), but does not extend to roasting or other processing (FAQ Q. 37).
- Paragraph 2, clause (ze) substituted: “goods transport agency” now means “any person who provides service in relation to transport of goods by road and issues a consignment note by whatever name called”, removing the exclusion of ECOs relating to local delivery.
Corresponding amendments have been made in Notification No. 9/2017-Integrated Tax (Rate) vide Notification No. 07/2026-Integrated Tax (Rate) dated 27.10.2026 (G.S.R. 940(E)) (new S. Nos. 32AA, 44A and 57A; amendments to S. Nos. 16, 19, 22A and 25B) and in Notification No. 12/2017-Union Territory Tax (Rate) vide Notification No. 07/2026-Union Territory Tax (Rate) dated 27.10.2026 (G.S.R. 941(E)). Significantly, the IGST notification additionally inserts a new S. No. 10M in Notification No. 9/2017-Integrated Tax (Rate) exempting “Import of services by an establishment of a foreign company in India, which is a shipping company, from a related person or from any of its other establishments outside India, when made without consideration”, with “foreign company” having the meaning assigned in Section 2(42) of the Companies Act, 2013. This gives effect to para C2(10) of the Press Release and brings foreign shipping lines at par with foreign airlines (S. No. 10L, exempted from 10.10.2024); the past period is to be regularised on an “as is where is” basis (FAQs Q. 4 to Q. 7). Being an import of services, this entry has no counterpart in the CGST/UTGST notifications.
Other services-related recommendations of the Council, namely the clarification on statutory and ancillary recoveries (registration charges, road tax, insurance, FASTag) in motor vehicle leasing, the self-certification mechanism for research and development services under S. No. 44A, and the treatment of notional interest under Fund Transfer Pricing in banks, are clarificatory in nature and are expected to be addressed through circulars rather than through this Notification.
Effective date:
The Notification comes into force with effect from 1st November, 2026. The exemptions apply to supplies whose time of supply falls on or after that date; TOT concession fees and other consideration whose time of supply under Section 13 arose before 01.11.2026 remain taxable, and the Notification does not provide any retrospective relief.
Key takeaways for taxpayers and the industry:
- Helicopter operators in the North-East, Sikkim and Bagdogra: Seat-share services from/to airports and helipads in the specified States become exempt; operators will have to reverse ITC attributable to exempt supplies under Rule 42/43 and distinguish seat-share services (exempt) from charters (taxable) in their records and ticketing systems.
- Goods transport agencies and ECOs: GTAs transporting goods ordered through ECOs (e.g., marketplace shipments to consumers) must charge 5% (without ITC) or 18% (with ITC, where the forward charge option has been exercised) even where the consignee is unregistered. ECOs are not liable under Section 9(5) for GTA services; the compliance rests with the GTA. Where the ECO itself is the recipient of the GTA service (ECO as consignor), reverse charge under S. No. 1 of Notification No. 13/2017-Central Tax (Rate) continues to apply to the ECO as a body corporate.
- Seed companies and warehouses: Storage or warehousing of seeds meant for sowing (including treated and packed certified seeds and planting material) is exempt regardless of whether the seeds qualify as agricultural produce; seeds meant for consumption, industrial or other non-sowing use remain outside the exemption (FAQ Q. 41). Warehouse operators should obtain declarations on the end-use of seeds stored.
- Highway concessionaires and authorities: The grant of exclusive right to collect toll under TOT concession agreements by NHAI, State authorities and government entities is exempt from 01.11.2026, removing GST on upfront and periodic concession payments. This must be read with the special procedure for payment of tax on O&M services under Notification No. 10/2026-Central Tax (Rate) (Update 9). Bids submitted and agreements signed before 01.11.2026 should be examined for the time of supply of the concession fee.
- Coffee curers and planters: Curing charges billed to cultivators become exempt; curers will lose ITC on their inputs (machinery, power, consumables) attributable to exempt supplies and should re-price accordingly. Curing of coffee for traders or exporters (not cultivators) remains taxable.
- Foreign shipping lines: Services received by Indian establishments of foreign shipping companies from their overseas head office/related persons without consideration are exempt from IGST under reverse charge from 01.11.2026, provided the Indian establishment is of a “foreign company” under the Companies Act, 2013. Services for which consideration is paid continue to be taxable (FAQ Q. 4).
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.-07-2026-CT-UT-IG-Rate.pdf
