India's government has introduced revised GST rules on delivery services connected to e-commerce platforms that reduce the tax rate from 18% to 5% without allowing input tax credit. Nasscom has petitioned for these rules to be delayed until January 1, 2027, citing the need for businesses to update complex billing, accounting, and compliance systems with short notice.
- GST on e-commerce delivery services reduced from 18% to 5% without input tax credit.
- New rules apply to all deliveries via e-commerce platforms, not just local ones.
- Nasscom requests delaying enforcement until January 2027 for smooth transition.
What happened
The Indian government has issued new GST notifications effective November 1, 2026, revising tax treatment for delivery services provided through e-commerce operators. The GST rate on these services has been lowered from 18% to 5%, but input tax credit (ITC) is no longer permitted. This means businesses cannot offset the GST paid on delivery-related expenses against their GST liabilities.
Previously, the GST provisions applied mainly to local delivery services, but the updated classifications now cover deliveries over any distance conducted via e-commerce platforms, except for postal and courier services. Delivery service providers who are unregistered under GST will have their platforms liable to pay tax, reflecting a shift in compliance responsibility.
Why it matters
These changes impact a wide range of stakeholders including food delivery apps, online marketplaces, and logistics companies. The removal of input tax credit could increase costs for companies heavily dependent on unregistered delivery partners or third-party transport agencies, affecting pricing and operational models.
Nasscom’s request for a deferral until January 1, 2027, highlights the practical difficulties firms face in adapting enterprise resource planning (ERP) systems, invoicing workflows, and tax compliance processes within the limited window between notification and enforcement. The organization emphasizes that sufficient time is essential to ensure accurate implementation and to avoid disruption across the e-commerce and logistics ecosystem.
What to watch next
Industry stakeholders should watch for updates on how these regulatory changes will affect delivery pricing structures, GST compliance strategies, and the broader logistics market. Potential impacts on customer delivery fees and service partnerships warrant attention as companies adjust to the revised tax requirements.