GST on O&M Services under TOT Projects
GST on O&M Services under TOT Projects: Special Tax Payment Mechanism from 1 November 2026
The Central Government has issued Notification No. 10/2026–Central Tax (Rate), dated 27 October 2026, under Section 148 of the Central Goods and Services Tax (CGST) Act, 2017, introducing a special provision for payment of GST on operation and maintenance (O&M) services provided by concessionaires under the Toll-Operate-Transfer (TOT) model.
1. Applicability of the Notification: The notification covers concessionaires who fulfil the following conditions:
- They have entered into a concession agreement with a concessioning authority under the Toll-Operate-Transfer (TOT) model.
- They provide operation and maintenance services to the concessioning authority during the concession period.
Such concessionaires are required to discharge Central GST on the value of O&M services corresponding to the amounts charged or debited from the escrow account maintained under the concession agreement.
2. GST Payment Based on Escrow Account Debits: Under this special arrangement, GST is payable in the tax period in which the relevant operation and maintenance expenditure is actually charged or debited from the escrow account.
Accordingly, the tax liability will arise with reference to the amount withdrawn or debited from the escrow account towards eligible O&M expenses incurred by the concessionaire.
This provides a specific mechanism for determining the tax payment period for the class of registered persons covered by the notification.
3. Meaning of Concession Agreement: For the purposes of this notification, a Concession Agreement refers to an agreement between a concessionaire and a concessioning authority under the Toll-Operate-Transfer (TOT) model, having the following characteristics:
- The concessionaire receives exclusive rights to demand, collect and retain toll revenue from a road or highway.
- The concessionaire is responsible for operating and maintaining the road or highway throughout the concession period.
- The concessionaire is required to pay the concession fee upfront.
4. Meaning of Concessioning Authority: The term Concessioning Authority includes any of the following entities entering into the concession agreement:
- Central Government;
- State Government;
- Union Territory;
- Local Authority;
- Governmental Authority; or
- Government Entity.
5. Effective Date: The provisions of Notification No. 10/2026–Central Tax (Rate) shall become effective from 1 November 2026.
Key Takeaway
The notification introduces a specific GST payment mechanism for qualifying concessionaires providing operation and maintenance services under the TOT model. Instead of determining the relevant tax period independently of the escrow transactions, GST is payable in the tax period in which the O&M expenditure is charged or debited from the escrow account, subject to the conditions specified in the notification.
Notification No. 10/2026-Central Tax (Rate)
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