Key Changes in GST through Finance Act, 2026

1. Scope

The Finance Act, 2026 introduces significant amendments to the Goods and Services Tax framework. The changes aim to remove interpretational inconsistencies, align statutory provisions with commercial practice, and reduce long-standing anomalies affecting exporters and intermediaries. 

Amendments have been proposed in the CGST Act and the IGST Act covering post-sale discounts, refund mechanisms, appellate structure, and place of supply provisions. These revisions are expected to enhance certainty and improve operational efficiency. 

2. Concern

2.1 Post-Sale Discounts – Amendment to Section 15(3)(b)

Earlier, post-sale discounts were deductible only if agreed before supply and linked to specific invoices. The amendment allows deduction where: 

• A credit note is issued under Section 34. 
• Recipient reverses proportionate ITC attributable to the discount. 

The requirement of prior agreement and invoice linkage is removed. 

2.2 Credit Notes – Amendment to Section 34

Credit notes can now be issued explicitly for post-sale discounts referred to in Section 15(3)(b), even if granted for commercial reasons after supply. 

2.3 Provisional Refund in Inverted Duty Structure

Section 54(6) is amended to allow 90% provisional refund for unutilised ITC arising from inverted duty structure. This improves working capital flow. 

2.4 Refund of IGST on Exports Below ₹1,000

Refund of IGST paid on exports will be granted even if the amount is less than ₹1,000. This benefits small exporters and e-commerce shipments. 

2.5 National Appellate Authority for Advance Ruling

Until constitution of the National Appellate Authority, the Government may empower an existing authority, including a Tribunal, to hear appeals in cases of conflicting advance rulings. This provision is effective from 1 April 2026. 

2.6 Place of Supply – Intermediary Services

Section 13(8)(b) of the IGST Act is proposed to be omitted. Place of supply for intermediary services will now be determined under Section 13(2), i.e., location of the recipient. 

3. Proposed Actions

• Revise internal discount policies and documentation practices. 
• Automate ITC reversal tracking in ERP systems. 
• Reassess intermediary contracts post amendment. 
• Evaluate eligibility for provisional refunds under inverted duty structure. 
• Monitor appellate developments effective 1 April 2026. 
• Conduct GST impact assessment before implementation.