Section 26 of the Central Goods and Services Tax Act, 2017 deals with deemed registration. This provision establishes an important link between registration under the CGST Act and registration under the corresponding State Goods and Services Tax (SGST) Act or Union Territory Goods and Services Tax (UTGST) Act.
The basic idea behind Section 26 is that GST registration is administered through corresponding Central and State or Union Territory tax laws. Once registration or a Unique Identity Number (UIN) is granted under the applicable State GST or Union Territory GST law, it is generally treated as granted under the CGST Act as well, provided the application has not been rejected under the CGST Act within the prescribed period.
The provision also works in the opposite direction. If the registration or UIN application is rejected under the State GST Act or UTGST Act within the relevant period, that rejection is treated as a rejection under the CGST Act.
Therefore, Section 26 creates a mutual linkage between the Central and State/Union Territory registration decisions.
What is Section 26 of the CGST Act?
Section 26 is titled “Deemed registration.”
The section contains only two sub-sections, but both have significant importance.
Section 26(1)
Where registration or a Unique Identity Number is granted under the applicable State GST Act or Union Territory GST Act, that grant is deemed to be a grant under the CGST Act, provided the application has not been rejected under the CGST Act within the time specified in Section 25(10).
Section 26(2)
Where an application for registration or a Unique Identity Number is rejected under the State GST Act or Union Territory GST Act, that rejection is deemed to be a rejection of the application under the CGST Act as well.
The current text of Section 26 remains in force in the CGST Act.
Why Was Section 26 Introduced?
GST is a dual tax system in India.
For most taxable intra-State supplies, the tax framework involves:
- Central Goods and Services Tax (CGST)
- State Goods and Services Tax (SGST), or
- Union Territory Goods and Services Tax (UTGST), as applicable
The CGST Act governs the Central component, while the corresponding State or Union Territory legislation governs the State or Union Territory component.
If taxpayers had to go through completely independent registration processes under each corresponding law, it could create unnecessary duplication.
Section 26 provides a statutory mechanism through which the registration decision under one corresponding GST law is recognised under the other, subject to the conditions specified in the section.
This helps maintain a coordinated registration framework.
Section 26(1) – Deemed Grant of Registration
Section 26(1) provides that the grant of registration under the State GST Act or UTGST Act shall be deemed to be a grant of registration under the CGST Act.
However, there is an important condition.
The application must not have been rejected under the CGST Act within the time specified in Section 25(10).
In simple terms:
State/UT registration granted + no timely rejection under CGST = registration deemed granted under CGST.
The same principle applies to a Unique Identity Number.
Example
Suppose a taxpayer applies for GST registration in a particular State.
The corresponding State tax authority grants registration.
If the CGST application has not been rejected within the applicable period specified under Section 25(10), the grant of registration under the State GST law is deemed to be a grant under the CGST Act as well.
The taxpayer therefore does not need to treat the Central and State registration grants as completely separate approvals.
What is the Condition Under Section 26(1)?
The condition is important because Section 26 does not say that State or UT approval will automatically override a rejection under the CGST Act.
The section specifically states that the deemed grant applies subject to the condition that the application has not been rejected under the CGST Act within the time specified in Section 25(10).
Therefore, Section 26 must be read together with Section 25.
Section 25 contains the framework for verification, approval and rejection of registration applications, while Section 26 establishes the corresponding deemed effect between the Central and State/UT laws.
Section 26(2) – Deemed Rejection
Section 26(2) provides the reverse mechanism.
It states that, notwithstanding Section 25(10), a rejection of an application for registration or UIN under the State GST Act or UTGST Act shall be deemed to be a rejection under the CGST Act.
This prevents a situation where the same application is treated as rejected under one component of GST but approved under the other solely because the two authorities have reached different registration outcomes.
In simple terms:
State/UT rejection = deemed CGST rejection.
This is the counterpart to Section 26(1).
Section 26 Creates Two-Way Coordination
The operation of Section 26 can be understood through two basic situations.
| Situation | Effect under Section 26 |
|---|---|
| Registration granted under SGST/UTGST and not rejected under CGST within prescribed period | Deemed grant under CGST |
| Registration rejected under SGST/UTGST | Deemed rejection under CGST |
Therefore, Section 26 establishes coordination between the corresponding GST registration laws.
Section 26 and Section 25 – Difference
Section 25 and Section 26 are closely connected but perform different functions.
Section 25 – Procedure for Registration
Section 25 deals with the procedure for obtaining GST registration. It covers matters such as:
- Application for registration
- Registration in the relevant State or Union territory
- Voluntary registration
- Separate registration
- PAN requirements
- Suo moto registration
- UIN
- Verification
- Grant or rejection of registration
The CGST Rules provide the detailed procedural framework.
Section 26 – Deemed Registration
Section 26 deals with the relationship between registration granted or rejected under the State GST/UTGST law and the CGST Act.
Therefore:
Section 25 = procedure
Section 26 = deemed effect of corresponding registration decision
Section 26 and Section 25(10)
Section 25(10) provides that registration or a UIN is granted or rejected after due verification in the prescribed manner and within the prescribed period.
Section 26(1) specifically refers to this period.
This means that when determining whether the grant under the State or Union Territory law produces a deemed grant under the CGST Act, the relevant period under Section 25(10) becomes important.
The practical processing timelines are further provided through the CGST Rules.
Under the registration rules, where the proper officer does not take the prescribed action within the applicable period, the application can be deemed approved under the relevant procedural provisions.
It is therefore important to distinguish deemed approval under the registration procedure from deemed registration under Section 26.
Section 26 Is Different From Deemed Approval Under Section 25(12)
This is one of the most important points when studying GST registration.
Section 25(12) provides that registration or a UIN shall be deemed to have been granted after the prescribed period under Section 25(10), where no deficiency has been communicated within that period.
Section 26 is different.
Section 25(12)
Deals with deemed grant because the prescribed registration-processing period expires without communication of deficiency.
Section 26
Deals with the effect of registration or rejection under the corresponding State GST or UTGST law on registration under the CGST Act.
Therefore, the two provisions should not be confused.
Example to Understand the Difference
Suppose a taxpayer applies for registration.
The application is processed under the applicable GST registration procedure.
If the proper officer does not take the prescribed action within the relevant period and the statutory conditions for deemed approval are satisfied, Section 25(12) becomes relevant.
Now consider a different situation.
The State tax authority grants registration, while the corresponding CGST application has not been rejected within the period specified in Section 25(10).
Section 26(1) then provides the deemed CGST registration consequence.
Thus, although both provisions use the concept of “deemed” registration, they operate in different circumstances.
Section 26 and Unique Identity Number
Section 26 does not apply only to ordinary GST registration.
It also specifically refers to a Unique Identity Number (UIN).
Section 25(9) provides for UINs for specified entities, including certain specialised agencies of the United Nations, specified multilateral financial institutions and organisations, consulates, embassies and other notified persons or classes of persons.
Therefore, the deemed grant and deemed rejection mechanism under Section 26 can also apply to UIN applications.
What is a Unique Identity Number?
A Unique Identity Number is a special identification mechanism under GST for specified entities rather than an ordinary GST registration for a taxable business.
Section 25(9) specifically provides for UINs for certain entities such as:
- Specialised agencies of the United Nations Organisation
- Certain notified multilateral financial institutions and organisations
- Consulates
- Embassies of foreign countries
- Other persons or classes of persons notified by the Commissioner
The UIN is provided in the prescribed manner and for prescribed purposes, including eligible refund claims relating to notified supplies.
Section 26 ensures that the corresponding grant or rejection of a UIN under the State or Union Territory GST framework receives the specified deemed effect under the CGST Act.
Practical Example of Section 26
Suppose a specified international organisation applies for a UIN.
The corresponding State tax authority grants the UIN.
If the application has not been rejected under the CGST Act within the period specified under Section 25(10), Section 26(1) provides that the grant under the State GST law is deemed to be a grant under the CGST Act.
The organisation therefore receives coordinated recognition under the corresponding GST laws.
Example of Deemed Rejection
Consider another situation.
A person applies for GST registration.
The State GST authority examines the application and rejects it under the State GST Act.
Under Section 26(2), that rejection is deemed to be a rejection under the CGST Act as well.
This means the taxpayer cannot treat the application as successfully registered under CGST merely because the Central authority has not independently issued a rejection.
Why Deemed Rejection Matters
The deemed rejection provision provides consistency between the two components of the GST registration framework.
Without such a provision, there could potentially be an inconsistent situation where:
- State registration is rejected, but
- CGST registration is treated as granted.
Section 26 prevents the registration application from being treated differently in this manner by providing the deemed rejection consequence.
Does Section 26 Mean There Are Two Separate GST Registrations?
No.
Section 26 should not be understood as creating two completely independent GST registrations for the same taxable person merely because CGST and SGST/UTGST are governed by separate laws.
GST is based on a dual statutory framework, but the registration mechanism is coordinated.
The GST registration certificate and GSTIN operate within this framework.
CBIC’s registration rules provide for the issuance of the registration certificate in FORM GST REG-06 and assignment of the GSTIN.
Section 26 provides the legal connection between the corresponding Central and State/Union Territory registration laws.
Section 26 and GSTIN
The GSTIN is the identification number assigned to a registered person.
The registration rules provide the structure of the GSTIN, including the State code, PAN or TAN-related characters, entity code and checksum character.
Section 26 does not create a separate GSTIN for CGST and another GSTIN for SGST.
Instead, it establishes the deemed effect of the corresponding registration decision under the respective GST laws.
Does Section 26 Apply to Every GST Registration?
Section 26 is framed in terms of registration or UIN granted or rejected under the State GST Act or UTGST Act and its deemed effect under the CGST Act.
It is therefore specifically concerned with the relationship between these corresponding laws.
It should not be interpreted as a general rule that every registration application is automatically approved merely because some other registration-related action has occurred.
The conditions in Section 26 must be satisfied.
Role of the GST Common Portal
The GST registration system operates through the common portal.
The CGST Rules provide that ordinary applicants submit their registration applications electronically through the common portal, with prescribed details and documents.
The portal-based system supports the coordinated administration of GST registration.
However, the legal effect of Section 26 comes from the statute itself. The common portal is the technological platform through which the registration process and related communications are administered.
Section 26 and Registration Verification
Section 26 does not remove the verification requirement under Section 25.
Section 25(10) requires registration or UIN to be granted or rejected after due verification in the prescribed manner and within the prescribed period.
The CGST Rules contain the detailed verification and processing framework.
For ordinary applications, the rules provide for:
- Submission of the application
- Verification by the proper officer
- Clarification where required
- Approval where the requirements are satisfied
- Rejection where the requirements are not satisfied
The current CBIC registration rules specify these procedures and related forms.
Section 26 and Rejection by One Authority
A key principle of Section 26 is that rejection under the State GST or UTGST law has a corresponding deemed rejection effect under the CGST Act.
This is different from saying that every minor query or clarification issued by one authority automatically amounts to rejection.
The statutory provision specifically refers to rejection of the application.
Therefore, a taxpayer should distinguish between:
- A clarification notice
- A request for additional information
- A deficiency communication
- A final rejection of the application
These are not necessarily the same thing.
Section 26 and Registration Application Processing
A simplified way to understand the relationship is:
Step 1: The taxpayer submits the registration application.
Step 2: The application is processed under the applicable GST registration framework.
Step 3: The State/UT and Central registration framework operates through the corresponding GST laws.
Step 4: If registration is granted under the State/UT law and the CGST application has not been rejected within the relevant period, Section 26(1) gives it the deemed CGST effect.
Step 5: If the application is rejected under the State/UT law, Section 26(2) gives that rejection the deemed CGST effect.
This is the basic mechanism of Section 26.
Section 26 and Input Tax Credit
Section 26 itself does not contain an independent provision granting input tax credit.
Its purpose is related to registration and UIN.
Therefore, a taxpayer should not interpret Section 26 as an ITC provision.
Input tax credit is governed by the separate provisions of the CGST Act, including Section 16 and related rules.
The importance of Section 26 for a registered taxpayer is that it establishes the legal registration status within the corresponding Central and State/Union Territory GST framework.
Section 26 and GST Compliance
Once a person is validly registered, the person may become subject to the applicable GST compliance requirements.
These can include:
- Filing applicable GST returns
- Payment of GST
- Issuing tax invoices
- Maintaining records
- Claiming eligible input tax credit
- Complying with e-invoicing requirements where applicable
- Complying with e-way bill provisions where applicable
- Updating registration details when required
Section 26 itself does not prescribe all these compliance requirements. They arise from the other provisions of the GST law applicable to registered persons.
Common Mistakes About Section 26
Mistake 1 – Confusing Section 26 With Section 25(12)
Section 25(12) concerns deemed grant after expiry of the prescribed processing period in the absence of a deficiency communication.
Section 26 concerns the deemed effect of State/UT registration or rejection under the CGST Act.
These are separate concepts.
Mistake 2 – Assuming State Approval Always Overrides CGST Rejection
Section 26(1) itself contains a condition that the application must not have been rejected under the CGST Act within the period specified under Section 25(10).
Therefore, State approval cannot simply be treated as overriding a timely CGST rejection.
Mistake 3 – Ignoring Section 26(2)
Section 26 works in both directions.
A rejection under the State GST or UTGST law is deemed to be a rejection under the CGST Act.
Mistake 4 – Treating UIN and GSTIN as the Same Thing
Section 26 covers both registration and UIN, but a UIN is a special identification number for specified entities and is not the same as an ordinary GST registration obtained by a taxable business.
Mistake 5 – Assuming Section 26 Is a Separate Registration Procedure
Section 26 does not prescribe a completely separate application process.
The detailed application and verification procedure is primarily dealt with under Section 25 and the CGST Rules.
Section 26 vs Section 25(12)
| Basis | Section 25(12) | Section 26 |
|---|---|---|
| Main subject | Deemed grant of registration/UIN after prescribed processing period | Deemed effect of State/UT registration or rejection under CGST |
| Main trigger | No deficiency communicated within prescribed period | Grant or rejection under State GST/UTGST framework |
| Relationship | Part of CGST registration processing | Coordinates CGST with SGST/UTGST registration |
| Rejection mechanism | Covered by registration procedure | State/UT rejection is deemed CGST rejection |
| Main purpose | Prevent indefinite delay in processing | Maintain consistency between corresponding GST laws |
The distinction follows directly from the statutory wording of Sections 25 and 26.
Section 26 – Simple Illustration
The provision can be remembered through two simple rules.
Rule 1 – Grant
SGST/UTGST registration granted + no timely CGST rejection = deemed CGST registration.
Rule 2 – Rejection
SGST/UTGST registration rejected = deemed CGST rejection.
These two principles form the core of Section 26.
Section 26 – Key Takeaways
The most important points are:
- Section 26 deals with deemed registration.
- It connects registration under the State GST or UTGST Act with registration under the CGST Act.
- Registration granted under the State GST or UTGST law is deemed to be granted under the CGST Act, subject to the condition specified in Section 26(1).
- The condition is that the application has not been rejected under the CGST Act within the period specified in Section 25(10).
- Section 26 also applies to a Unique Identity Number.
- Rejection under the State GST or UTGST Act is deemed to be rejection under the CGST Act.
- Section 26 should be read together with Section 25.
- Section 26 is different from the deemed-grant mechanism under Section 25(12).
- The provision helps coordinate the Central and State/Union Territory components of the GST registration framework.
- Section 26 does not itself create an independent tax liability or input tax credit entitlement.
- The detailed registration procedure is contained in Section 25 and the CGST Rules.
Conclusion
Section 26 of the CGST Act, 2017 provides an important coordination mechanism between the Central GST registration framework and the corresponding State GST or Union Territory GST registration framework.
Under Section 26(1), when registration or a Unique Identity Number is granted under the State GST Act or UTGST Act, that grant is deemed to be a grant under the CGST Act, provided the application has not been rejected under the CGST Act within the period specified under Section 25(10).
Section 26(2) establishes the reverse principle. If the application for registration or UIN is rejected under the State GST or UTGST Act, that rejection is deemed to be a rejection under the CGST Act as well.
The provision should not be confused with Section 25(12), which deals with deemed grant where the prescribed registration-processing period expires without a deficiency being communicated. Section 26 instead focuses on the relationship between the corresponding Central and State/Union Territory GST laws.
In practical terms, Section 26 helps ensure that a taxpayer’s registration status remains coordinated across the dual GST structure rather than allowing conflicting registration outcomes under the Central and State/Union Territory laws.
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