The Finance Bill, 2026 proposes significant amendments to the GST law to simplify compliance, remove procedural bottlenecks, and provide clarity to taxpayers. Amendments to Sections 15 and 34 of the CGST Act aim to ease the treatment of post-sale discounts by removing the requirement of linking discounts to prior agreements and specific invoices, allowing credit notes to be issued provided the recipient reverses corresponding input tax credit. Section 54 is proposed to be amended to extend provisional refunds to cases of inverted duty structure and to remove the minimum threshold for claiming refunds on exports made with payment of tax, addressing liquidity issues faced by exporters. A new sub-section in Section 101A seeks to resolve delays in appellate remedies by empowering the government to authorize existing authorities to hear appeals until the National Appellate Authority is constituted. Further, omission of Section 13(8)(b) of the IGST Act proposes shifting the place of supply for intermediary services to the recipient’s location, reducing unintended domestic taxation of cross-border services.
SECTION 56 OF CGST ACT AND CLAUSE 137 OF THE BILL
Proposes an amendment to Section 15 of the CGST Act by substituting the clause b of the subsection 3 to do away with requirement of linking the post-sale discount with an agreement specifically linked to relevant invoices and to refer to issuance of credit note under section 34 where the input tax credit is reversed by the recipient.
Under the existing provision, post-sale discounts are allowed as a deduction from the value of supply only if such discounts are established through a prior agreement and are specifically linked to relevant invoices. This proposal is in line with the discussions held during the 56th GST Council meeting.
SECTION 34 OF CGST ACT AND CLAUSE 138 OF THE BILL
Proposes a consequential amendment to Section 34 of the CGST Act relating to issuance of credit notes for post-sale discounts. It provides that credit notes may be issued for post-sale discounts under Section 34, provided the recipient reverses the corresponding input tax credit.
The existing provision requires post-sale discounts to be backed by a prior agreement and to be specifically linked to relevant invoices.
SECTION 54 OF CGST ACT AND CLAUSE 139 OF THE BILL
Proposed to be amended to extend the benefit of provisional refund to refunds arising out of inverted duty structure.
The existing provisions allow provisional refunds being available for zero-rated supplies, and not for taxpayers suffering from inverted duty structure who often face long delays in receiving refunds.
Proposed to amend to remove the minimum threshold limit for claiming refund in cases where goods are exported out of India with payment of tax.
The threshold limit was found to be a procedural barrier, particularly for small and medium exporters, resulting in accumulation of small refund amounts that could not be claimed.
SECTION 101A AND CLAUSE 140 OF THE BILL
Proposes insertion of a new sub-section (1A) in Section 101A of the CGST Act to address the certain changes in GST appellate framework. The proposed amendment empowers the Government, on the recommendation of the GST Council, to authorize any existing Authority to hear such appeals until the National Appellate Authority is set up. It is further clarified through an Explanation that the term “existing Authority” includes a Tribunal.
Under existing provisions, appeals under Section 101B, arising from conflicting Advance Rulings issued by different State Appellate Authorities, can be filed only before the National Appellate Authority. However, since the National Appellate Authority is yet to be constituted, such appeals have remained in limbo, leaving taxpayers without an effective remedy.
SECTION 13 AND CLAUSE 141 OF THE BILL
Proposes to omit clause (b) of sub-section (8) of Section 13 of the IGST Act. As a result, the place of supply for intermediary services will now be determined in accordance with Section 13(2), that is, the location of the recipient of services.
Under the existing provision, intermediary services were treated as supplied at the location of the supplier, which often resulted in such services being taxed in India even when the recipient was located outside India.
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