Ahead of the rollout of the Retail Sale Price (RSP)–based valuation mechanism from 1 February 2026, the Goods and Services Tax Network (GSTN) has issued an advisory for taxpayers.
The advisory provides guidance on reporting taxable value and tax liability under the RSP-based valuation in e-invoices, e-way bills, GSTR-1, GSTR-1A, and the Invoice Furnishing Facility (IFF).
As part of the RSP-based system, GST on notified tobacco products has been computed at 40% and the taxable value will now be derived from the declared RSP printed on the package, rather than the transaction value. The mechanism applies to Pan Masala (HSN 2106 90 20), unmanufactured tobacco (HSN 2401), cigarettes (HSN 2402), and other manufactured tobacco substitutes (HSN 2403/2404).
To facilitate proper reporting and prevent system errors, GSTN advises taxpayers to:
- Report the Net Sale Value (actual commercial consideration) in the taxable value field.
- Compute the tax amount strictly using the RSP-based formula: Tax Amount = (RSP × GST Rate) ÷ (100 + Sum of applicable tax rate).
- Report the total invoice value as the sum of the Net Sale Value and the RSP-based tax.
This approach ensures that the RSP-derived taxable value does not exceed the total commercial invoice amount, allowing smooth enforcement of the GST Council's decision across all pack sizes, including the smallest units.