India’s tax administration has clarified that businesses seeking GST registration do not need to provide Udyam certificates proving their MSME status or explain why they operate from residential premises. Applications also cannot be rejected because of unpaid electricity or water bills.

Key Takeaways

  • Applications with successful Aadhaar authentication must be processed within seven working days.
  • Tax demands must identify the alleged violation, supporting evidence and calculation of the amount sought.
  • Separate clarifications address export payments and GST credit for demo vehicles, banks and other businesses.

GST registration requirements

The Central Board of Indirect Taxes and Customs (CBIC) issued the clarifications on October 27, 2026, following decisions at the GST Council’s October 8 meeting. They are intended to reduce registration hurdles for businesses, including MSMEs and those operating from co-working spaces.

The board directed officials to process applications within seven working days when Aadhaar authentication is successful. The source material does not specify a separate effective date for the clarifications or describe the previous processing deadline.

Evidence required for tax demands

CBIC also directed officers to support tax demands with documentary evidence. Businesses should not be accused of fraud solely because they underpaid tax or reported a discrepancy.

A show-cause notice or tax demand must identify the alleged violation, the period involved and the supporting evidence, as well as explain how proposed tax, interest or penalties were calculated. Demands should be quantified, preferably by financial year. State and central GST authorities cannot conduct parallel proceedings on the same matter.

Export payments and tax credit

Service exporters can meet applicable payment conditions through approved rupee-based accounts, including special rupee vostro accounts, subject to Reserve Bank of India rules and foreign trade requirements. For goods exporters, the deadline for receiving overseas payments follows RBI-prescribed timelines, including permitted extensions.

Where an authorised dealer bank permits an export payment requirement to be written off, the tax department will not seek repayment of the related GST refund to the extent of the write-off.

Authorised car dealers using the agency model can claim tax credit on demo and test-drive vehicles. Businesses receiving credit through an input service distributor must check their eligibility and reverse ineligible amounts; distributors must report eligible and ineligible credit separately. Banks and non-bank financial companies will not face adverse action over differences in how they reported GST credit in past returns.

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