With GST 2.0 largely implemented, Union Budget 2026 introduces only targeted GST amendments aimed at reducing litigation, easing valuation, speeding up refunds, and bridging appellate gaps. A key reform omits Section 13(8)(b) of the IGST Act, shifting the place of supply for intermediary services to the default rule, thereby aligning exports of services with refund eligibility and easing long-standing disputes. Valuation is simplified by allowing post-sale discounts to be excluded from taxable value without a prior agreement, provided a credit note is issued and proportionate ITC is reversed—bringing flexibility to commercial arrangements. Correspondingly, Section 34 is aligned to expressly permit credit notes for such discounts. Refunds get a boost through provisional refunds for inverted duty claims and removal of the ₹1,000 threshold for export refunds, improving cash flow and reducing bottlenecks. Finally, an interim appellate mechanism empowers existing authorities to hear advance ruling appeals until the National Appellate Authority is constituted, ensuring continuity and timely dispute resolution.
However, a few focused amendments have been proposed to streamline valuation, strengthen the refund framework, and address transitional gaps in the appellate mechanism.
1. Amendment in Section 13(8)(b) of the IGST Act, 2017 i.e., Place of supply of intermediary services where location of supplier or location of recipient is outside India – Section 13(8)(b) of the IGST Act, 2017 is omitted so as to provide that the place of supply for “intermediary services” will be determined as per the default provision under section 13(2) of the IGST Act, 2017
Impact: This is a major change, aligning the place of supply for intermediary services helping in reducing the major litigation for Indian service exporter. This will also help in streamlining the GST refund process for export of services.
2. Amendment in Section 15(3) of the CGST Act, 2017 i.e., Value of Taxable Supply – Section 15(3)(b) of CGST Act, 2017 is being amended to exclude the post-sale discounts from taxable value. Post-sale discounts can now be excluded from taxable value even without prior agreement, subject to:
- Supplier issuing a credit note, and
- Recipient reversing proportionate ITC in line with Section 34 of CGST Act, 2017.
Impact: This amendment provides greater flexibility in commercial discounting arrangements by eliminating the requirement of a pre existing agreement.
3. Amendment in Section 34(1) of the CGST Act, 2017 i.e., Credit Notes – Section 34(1) of theCGST Act, 2017 is expanded to allow credit notes to be issued not only when goods or services are returned or deficient, but also where a “discount referred to in Section 15(3)(b) of CGST Act, 2017 is given”. This aligns Section 34 of the CGST Act, 2017 with the revised Section 15 of the CGST Act, 2017, recognizing post supply discounts as a basis for issuing credit notes.
Impact: Section 34 is amended to include reference to Section 15, ensuring consistency between valuation provisions and credit note mechanisms
4. Amendment in Section 54 of the CGST Act, 2017 i.e., Refunds – Section 54 of the CGST Act, 2017 has been amended to:
- Section 54(6): Extend the provisions of provisional refund to refunds arising out of inverted duty structure; and
- Section 54(14): Remove the threshold limit (i.e., less than one thousand rupees) for sanction of refund claims in case of goods exported out of India with payment of tax.
Impact: Taxpayers claiming refund of inverted duty structure will now have access to faster provisional refunds, improving working capital.
Further amendment in section 54(14) shall simplifies the process for exporters of goods and reduces administrative bottlenecks
5. Amendment in Section 101A(1A) of the CGST Act, 2017 i.e., Orders of Appellate Authority – Sub-section (1A) is being inserted in Section 101A of CGST Act, 2017 to provide that the Central Government may, pending the constitution of the National Appellate Authority, by notification empower an existing Authority, for hearing appeals under section 101B of the CGST Act, 2017
The provisions of sub-sections (2) to (13) shall not be applicable where a Tribunal has been so empowered under sub-section (1A). An explanation to sub – section (1A) is also being inserted to clarify that the existing Authority also includes a tribunal. (Effective from 1 April 2026)
Impact: This amendment enables smoother transition and avoids delays due to non constitution of the National Appellate Authority.
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