Summary: Three important amendments to the Central Goods and Services Tax Act, 2017, are scheduled to take effect from 1 November 2026 through CBIC Notification No. 03/2026-Central Tax dated 26 October 2026, which brings sections 153 to 155 of the Finance Act, 2026 into force. The first amendment simplifies the GST treatment of post-sale discounts by removing the earlier requirements that discounts must be agreed upon before or at the time of supply and specifically linked to relevant invoices. Under the amended section 15(3)(b), suppliers may reduce the taxable value through credit notes issued under section 34, provided recipients reverse the corresponding input tax credit. Section 34(1) is also amended to expressly recognise credit notes issued for such discounts. These changes are particularly relevant to turnover incentives, year-end discounts, price protection and target-based commercial schemes. Suppliers must nevertheless observe the credit note reporting deadline and maintain evidence of recipient ITC reversal. The second amendment extends the statutory 90% provisional refund mechanism under section 54(6) to accumulated ITC arising from an inverted duty structure, strengthening the earlier administrative arrangement introduced through Instruction No. 06/2025-GST. The third amendment relaxes the ₹1,000 minimum refund restriction for specified exports of goods made with payment of tax. Businesses must also distinguish CGST commencement from the corresponding SGST position, which depends on individual state notifications. These changes make credit note documentation, buyer-supplier reconciliation, refund accuracy and state-wise commencement verification particularly important for GST compliance.
- GST Changes from 1 November 2026: Post-Sale Discounts, 90% Provisional Refunds and Small Export Refunds
- A Word on the State GST Position
- Post-Sale Discounts: What the Law Required Until Now
- What Changes from 1 November 2026
- A Simple Example
- What Suppliers Should Watch
- What Buyers Should Watch
- The 90% Provisional Refund for Inverted Duty Structure
- Small Export Refunds
GST Changes from 1 November 2026: Post-Sale Discounts, 90% Provisional Refunds and Small Export Refunds
From 1 November 2026, two long-pending GST changes become law. CBIC Notification No. 03/2026-Central Tax dated 26 October 2026 brings sections 153 to 155 of the Finance Act, 2026 into force. These amend sections 15, 34 and 54 of the CGST Act, 2017.
The first change fixes one of the most litigated areas of GST: post-sale discounts. The second gives statutory backing to faster refunds for businesses stuck with accumulated input tax credit under an inverted duty structure. Both have immediate practical consequences for suppliers, their buyers and refund claimants.
A Word on the State GST Position
The notification brings the amendments into force under the CGST Act. A transaction within a state also involves State GST, and each state must amend its own GST Act and notify the date from which the amendment applies. For interstate supplies, the IGST Act adopts the relevant CGST provisions.
In Maharashtra, the Maharashtra Goods and Services Tax (Amendment) Act, 2026 has been enacted, carrying the corresponding amendments to sections 15, 34 and 54 of the MGST Act. However, the SGST position from 1 November 2026 depends on the State Tax notification bringing these provisions into force. Readers in Maharashtra and other states should check their state’s GST notifications before applying the amended provisions to the SGST component of intra-state supplies.
Post-Sale Discounts: What the Law Required Until Now
Under the earlier section 15(3)(b), a discount given after supply could be excluded from the value of supply only if three conditions were met. The discount had to be established under an agreement entered into at or before the time of supply. It had to be specifically linked to relevant invoices. And the recipient had to reverse the input tax credit attributable to the discount.
In practice, the first two conditions caused most of the trouble. Year-end turnover discounts, target-based schemes, price protection and similar commercial arrangements are often decided after the supply, or apply across many invoices. Such discounts frequently failed the test, so suppliers either paid GST on value they never received, or issued financial credit notes without any GST adjustment.
What Changes from 1 November 2026
Section 153 of the Finance Act, 2026 substitutes section 15(3)(b). A post-supply discount can now be excluded from the value of supply where the supplier issues a credit note under section 34 and the recipient reverses the input tax credit attributable to that discount.
The requirement of a prior agreement and invoice-wise linkage is gone. Section 154 correspondingly amends section 34(1) so that a credit note can expressly be issued for a discount covered by section 15(3)(b). Until now, section 34 did not specifically refer to post-sale discounts, which itself was a source of dispute.
The credit note is now the centre of the mechanism. If it is not issued correctly and within time, the benefit is lost.
A Simple Example
Suppose a distributor buys goods worth Rs. 10,00,000 plus GST at 18% of Rs. 1,80,000 in August 2026. In December 2026, the supplier decides to give a 5% year-end discount of Rs. 50,000 for achieving annual volumes. There was no agreement for this discount at the time of supply.
Under the earlier law, this discount would usually fail the prior agreement condition, and the supplier could not reduce its output tax.
Under the amended law, the supplier issues a GST credit note for Rs. 50,000 plus Rs. 9,000 tax. The supplier reduces its output tax liability by Rs. 9,000, and the distributor reverses Rs. 9,000 of input tax credit. The tax effect on both sides now matches the commercial reality.
What Suppliers Should Watch
The time limit under section 34(2) still applies. A credit note must be declared in the return not later than 30 November following the end of the financial year in which the supply was made, or the date of filing the annual return, whichever is earlier. Year-end discounts for FY 2026-27 should be planned with this deadline in mind.
The supplier’s reduction in output tax depends on the recipient reversing the corresponding credit. Suppliers should keep evidence that the recipient has accepted the credit note and reversed the input tax credit. Where the discount is given to unregistered buyers or consumers, the position needs separate examination.
Discount policies, scheme documents and ERP credit note workflows should be reviewed now, so that GST credit notes, rather than financial credit notes, are issued wherever the supplier wants to reduce tax.
There is also a transition question that is likely to arise. For supplies made before 1 November 2026, where the discount and credit note come after that date, the applicable conditions are not beyond doubt. Until there is clarity, it would be prudent to document the discount terms carefully and take a considered view case by case.
Practitioners should also keep in mind CBIC Circular No. 251/08/2025-GST dated 12 September 2025, which clarified several doubts on secondary and post-sale discounts under the earlier provision. Whether, and to what extent, those clarifications continue to guide the amended provision is something to watch for further guidance on.
What Buyers Should Watch
For recipients, the amendment makes input tax credit reversal a clear legal obligation tied to the credit note. Buyers receiving volume, target or year-end discounts should reconcile credit notes received from suppliers against their books every month, and reverse the attributable credit in the same period. Where a supplier issues a GST credit note but the buyer does not reverse credit, the mismatch is likely to surface quickly in return matching.
Buyers should also check purchase contracts. Where a discount is passed through a GST credit note, the net cost of the purchase remains the same, but the timing of credit reversal affects cash flow.
The 90% Provisional Refund for Inverted Duty Structure
Section 54(6) of the CGST Act allows the proper officer to sanction 90% of a refund claim on a provisional basis. Statutorily, this facility was available for zero-rated supplies.
Section 155(a) of the Finance Act, 2026 extends it to refunds of unutilised input tax credit arising from an inverted duty structure, that is, claims under clause (ii) of the first proviso to section 54(3).
It is worth noting that this is not entirely new in practice. Following the recommendations of the 56th GST Council, CBIC had already directed through Instruction No. 06/2025-GST that 90% provisional refunds may be granted for inverted duty refund applications filed on or after 1 October 2025. The amendment now gives this a statutory basis, which reduces uncertainty for claimants and field officers alike.
The amendment does not widen the categories of input tax credit eligible for an inverted duty refund. The existing restrictions on eligibility and the formula for computing the refund continue to apply. What changes is the speed with which most of the money can be received.
Manufacturers and traders whose output rate is lower than their input rate, particularly after the rate rationalisation of 2025, should ensure their refund applications are complete and accurate, since provisional sanction is generally based on risk evaluation of the claim.
Small Export Refunds
Section 155(b) amends section 54(14) so that refunds of tax paid on goods exported with payment of tax can be granted even where the amount is below Rs. 1,000.
