GST clarifications: R&D grants, vehicle leasing recoveries, shipping companies and TRAI
What changed. Based on the recommendations of the 57th GST Council meeting, CBIC has clarified:
- R&D against grants. To claim the exemption under Entry 44A of Notification No. 12/2017–Central Tax (Rate), a certificate from the head of the government entity, research association, university, college or institution (notified under section 35(1)(ii) or (iii) of the Income-tax Act, 1961) stating that the activity is research and development and not consultancy may suffice.
- Motor vehicle leasing. Registration charges (including road tax), insurance, FASTag and other incidental expenses recovered by the lessor on top of lease rent form part of the composite leasing supply and are taxed at the rate for leasing of motor vehicles.
- Foreign shipping companies. Import of services without consideration by an Indian establishment from a related person or its establishment abroad is exempt from 1 November 2026 (Notification No. 07/2026–Integrated Tax (Rate)). GST paid for 1 July 2017 to 31 October 2026 is regularised on an "as is where is" basis.
- TRAI is not "Government" under section 2(53) of the CGST Act.
Who it affects. Research institutions and their funders, vehicle leasing companies and lessees, Indian establishments of foreign shipping companies, and suppliers to TRAI.
From when. The circular is dated 28 October 2026. The shipping exemption applies from 1 November 2026.
What to do. Research institutions should keep the head-of-institution certificate on record for each grant-funded project. Lessors should review invoicing of recoveries. Businesses with pending disputes on these points should consider the circular in their replies.
Official source: CBIC Circular No. 266/12/2026-GST dated 28 October 2026
This is general information based on the law as on the date shown, not professional advice. Rules change often; check the current position before acting.