GST Changes from 1 November 2026: Post-Supply Discounts and Refunds

The Central Board of Indirect Taxes and Customs (CBIC) has notified 1 November 2026 as the effective date for three amendments to the Central Goods and Services Tax (CGST) Act, 2017, introduced through the Finance Act, 2026. These changes address the valuation of post-supply discounts, provisional refund processing and the minimum threshold for certain export refund claims.

1. Post-Supply Discounts: Simplified Conditions

The amendments to Section 15(3)(b) and Section 34 of the CGST Act, 2017, change the conditions for excluding post-supply discounts from the taxable value of a supply.

Under the revised provisions, a post-supply discount can reduce the taxable value where:

• The supplier issues a credit note for the discount.

• The recipient reverses the input tax credit (ITC) attributable to the discount, where such credit was claimed.

A significant change is the removal of the requirement that the discount must be established through an agreement entered into at or before the time of supply and specifically linked to the relevant invoices.

Further, Section 34 expressly recognises such discounts as a ground for issuing a credit note. This provides greater flexibility for businesses that offer volume-based incentives, turnover-linked discounts or other post-supply commercial discounts.

Practical implication: Businesses should maintain clear records of discount calculations, credit notes and corresponding ITC reversals. Suppliers and recipients should also coordinate their accounting and GST reporting to ensure that the tax adjustments are properly documented.

2. Provisional Refunds: Extension to Inverted Duty Structure

The amendment to Section 54 of the CGST Act, 2017, extends the provision for provisional refund of up to 90% of the claimed refund amount to eligible refund claims arising from an inverted duty structure.

An inverted duty structure generally arises when the GST rate on inputs is higher than the GST rate on outward supplies, resulting in accumulated unutilised input tax credit, subject to the applicable statutory conditions.

The extension is intended to facilitate earlier access to eligible refund amounts instead of requiring taxpayers to wait for the entire claim to undergo final processing.

However, the 90% provisional refund is not automatic for every applicant. Eligibility, applicable restrictions, verification requirements and other conditions under the GST law must still be considered.

Practical implication: Businesses with accumulated ITC under an inverted duty structure should review their refund eligibility, supporting documentation and reconciliation of input and output tax records before filing claims.

3. Removal of the ₹1,000 Minimum Refund Limit for Exported Goods

The amendment to Section 54 also removes the minimum ₹1,000 threshold for refund claims relating to goods exported on payment of tax.

Previously, the statutory minimum refund amount could prevent claims below ₹1,000 from being entertained under the relevant provision. With the amendment, eligible claims for refunds of tax paid on exported goods will no longer be subject to this minimum amount restriction.

The change is particularly relevant to exporters with small-value consignments or transactions that generate relatively low refund amounts.

Practical implication: Exporters should review previously unclaimed eligible amounts and ensure that refund applications comply with the applicable documentation, procedural requirements and statutory time limits.

4. Effective Date and Compliance Considerations

As per Notification No. 03/2026-Central Tax dated 26 October 2026, the three amendments take effect from 1 November 2026.

The notification appoints this date for the amendments introduced by Sections 153, 154 and 155 of the Finance Act, 2026, concerning Sections 15, 34 and 54 of the CGST Act, respectively. The CBIC Tax Information Portal reflects the amendments to Sections 15 and 34 as awaiting notification before their commencement. (Sources: CBIC Tax Information Portal; Taxmann, notification update dated 27 October 2026.)

Businesses should consider the following steps:

• Review post-supply discount policies and credit note procedures.

• Establish a process for reconciling supplier credit notes with recipient ITC reversals.

• Assess eligibility for provisional refunds under the inverted duty structure provisions.

• Review export refund claims, including small-value claims, for compliance with the revised provisions.

• Monitor further CBIC clarifications and procedural changes relevant to implementation.

Conclusion

The GST amendments effective from 1 November 2026 aim to simplify post-supply discount adjustments, facilitate provisional refunds for eligible inverted duty claims and remove the minimum refund threshold for tax paid on exported goods. Businesses should review their GST processes to identify the practical impact of these changes and strengthen their refund and credit note documentation.

For expert guidance on this topic, contact your tax professional today.