The Rajya Sabha Unstarred Question No. 1838, answered on August 04, 2026, on “Apportionment and Settlement of IGST Revenue” was answered by the Minister of State in the Ministry of Finance, Shri Pankaj Chaudhary. The Question sought details regarding concerns raised by States, including Kerala, over apportionment and settlement of Integrated Goods and Services Tax (IGST) revenue, discrepancies or anomalies in settlement, review of the existing mechanism and measures proposed to strengthen the framework.
The Government informed the Rajya Sabha that the GST Council, at its 54th meeting held in New Delhi on September 9, 2024, approved the constitution of a Committee of Officers on IGST Settlement to examine issues relating to the settlement mechanism.
Accordingly, a Committee comprising officers from the Central Government and various State Governments, including Kerala, was constituted to examine issues pertaining to IGST settlement and recommend measures for improving the system.
The Committee was mandated to examine, among other issues, possible legislative amendments, system enhancements and refinements to the formula for apportionment of both positive and negative balances in the IGST account.
One of the principal decisions of the Committee was formulation of a Standard Operating Procedure (SOP) to address abnormal reversals of Input Tax Credit (ITC), which had been contributing to irregularities in the IGST settlement process.
The Committee also recommended alignment of ineligible credit and time-barred credit with the structure of Form GSTR-3B. As part of this exercise, STL 1.06, primarily covering domestic ineligible credit, and STL 1.10, relating to ineligible credit on imports, were approved for merger. Similarly, STL 1.11 was approved to be merged with STL 1.07.
Further, the Committee approved incorporation of the corresponding section numbers, rule numbers and source references in the Rules, besides recommending clarifications in areas where the existing provisions lacked precision.
The Government stated that the Committee of Officers’ report was subsequently placed before the GST Council at its 55th meeting. Following this, and with the approval of the GST Implementation Committee, the Goods and Services Tax Settlement of Fund Rules, 2026 were notified and published in the Gazette on March 30, 2026, incorporating the recommendations of the Committee.
The Standard Operating Procedure recommended by the Committee has also been implemented, providing an operational mechanism to address abnormal ITC reversals and improve consistency in the settlement process.
The measures are aimed at strengthening the IGST settlement framework through clearer rules, improved system architecture and refinements in the apportionment process, while addressing irregularities arising from credit reversals and related settlement entries.
Radhika Goyal is Author of Taxconcept Gurugram head office, for deeply reported tax, gst and income tax articles on issues that matter. He splits her time between New Delhi and Bengaluru, and has worked as a reporter, a podcaster and an editor for publications across India.