Table of Contents
- Gst Amendments With Implications Under Finance Bill 2026
- Post‑supply Discounts: Major Relief From Historical Litigation
- Credit Notes Aligned With Post-supply Discounts—without agreement Linkage
- Amendments To Refund Provisions—section 54 : Two Major Refund-related Amendments Are Proposed Under Clause 139:
- A. Provisional Refund Of 90% Extended To Inverted Duty Structure (ids)
- B. Provisional Refunds Extended To Inverted Duty Structure (ids)
- Removal Of Inr 1,000 Minimum Refund Threshold For Igst-paid Exports-
- Interim Appellate Authority For Advance Ruling—tribunal Empowered As Interim National Appellate Authority—section 101a
- Intermediary Services – Place Of Supply Shifted
GST Amendments with Implications under Finance Bill 2026
The Finance Bill 2026 introduces several progressive changes to the GST framework, aimed at reducing litigation, simplifying compliance, and aligning GST law with commercial realities. Below is a structured and comprehensive explanation of each amendment along with its practical impact on businesses.
Post‑Supply Discounts: Major Relief from Historical Litigation
- What changed? The earlier requirement that post‑supply discounts must be pre‑agreed before supply and linked to specific invoices has been removed. And now, discounts will be respected only on the basis of credit note issuance and reversal of ITC by the recipient.
- Practical Impact of GST Amendments with Implications under Finance Bill 2026 : Resolves long-standing disputes in sectors where year-end or performance‑based incentives are common, such as FMCG, Pharma, consumer electronics, and distribution-trade-driven industries. This simplifies commercial arrangements—no need to create artificial pre‑supply documentation. And reduces the risk of valuation disputes, denial of ITC, and show-cause notices.
Credit Notes Aligned with Post-Supply Discounts—Without Agreement Linkage
Background – Existing Legal Position (Section 15(3)(b)) : Under the current provisions, post‑supply discounts can be excluded from the value of taxable supply only if The discount is provided as per an agreement entered into before or at the time of supply, and The recipient reverses the proportionate ITC. This requirement has been a major source of litigation, especially for year-end schemes, quantity-based discounts, performance incentives, and secondary trade schemes.
Proposed Amendment – Section 15(3) Substituted : Clause (b) of Section 15(3) has been replaced. The amended Section 15(3) will now read:
Section 15 – Value of Taxable Supply
(3) The value of supply shall not include any discount which is given—
(a) before or at the time of supply and duly recorded in the invoice;
(b) after supply has been effected, if the supplier has issued a credit note and the recipient has reversed the attributable ITC in accordance with Section 34.
What Changed related Credit Notes Aligned with Post-Supply Discounts: Law now explicitly links credit notes with genuine post-supply discounts. A credit note can be issued even if the discount wasn’t pre-agreed, as long as the recipient reverses proportionate ITC. Departments frequently dispute such discounts on the ground that they were not pre-agreed, resulting in large valuation demands.
Practical Impact of this GST Amendments with Implications under Finance Bill 2026: Eliminates technical objections raised during audits. Provides tax certainty for trade schemes, volume-based incentives, and secondary discounts and improves transparency between suppliers and recipients. Key Change Related to Value of Taxable Supply under GST: The requirement of a pre-supply agreement has been removed. Following Implications
- Suppliers can issue credit notes for post-supply discounts even if not pre-documented.
- Tax liability can be reduced by the supplier solely based on credit note issuance.
- Recipients must reverse ITC proportionately, ensuring revenue neutrality.
- Eliminates long-standing valuation disputes.
- Aligns GST law with commercial trade practices.
Enabling Provision for Issuance of Credit Notes – Section 34 Amendment: Section 34(1) is amended to explicitly allow issuance of credit notes for discounts offered after supply. This makes Section 34 consistent with the revised Section 15(3), removing earlier inconsistencies. Both amendments (Clauses 137 and 138) will become effective on the date notified after presidential assent. Corresponding State/UT tax amendments will take effect simultaneously.
Amendments to Refund Provisions—Section 54 : Two major refund-related amendments are proposed under Clause 139:
A. Provisional Refund of 90% Extended to Inverted Duty Structure (IDS)
- Existing Position: Provisional refund (90%) is currently available only for zero‑rated supplies.
- Proposed Change: Provisional refunds will now also be available for IDS refund claims, where Input tax rates are greater than output tax rates and refunds arise due to accumulation of ITC
- Impact of change related to provisional refund of 90% extended to inverted duty structure (IDS). The benefit of 90% provisional refund is now extended to IDS refund claims.
- Significant working capital support Particularly beneficial for the textiles, Footwear, fertilizer, and Manufacturing sectors with rate inversion
B. Provisional Refunds Extended to Inverted Duty Structure (IDS)
- Practical Impact GST Amendments with Implications under Finance Bill 2026 Big liquidity support for industries where Input tax rates > output tax rates. And beneficial for textiles, footwear, fertilizers, and certain manufacturing segments. Also reduces refund processing time and working capital blockage.
Removal of INR 1,000 Minimum Refund Threshold for IGST-paid Exports-
- Current Rule: Refunds are not granted if the refund amount is below ₹1,000.
- Proposed Change: The threshold is removed, allowing refunds irrespective of amount.
- What Changed under GST Amendments with Implications under Finance Bill 2026? Earlier, no refunds were issued below ₹1,000 for exports made with payment of IGST. This restriction has been removed.
- Practical Impact of the New GST Amendment. Impact of Removal of ₹1,000 Minimum Refund Threshold for IGST-paid Exports: This change ensures full tax neutrality, especially benefiting small exporters, MSMEs, and and new e-commerce-based exporters, and also encourages export competitiveness. Change is beneficial for small exporters, MSMEs, and e-commerce exporters and ensures complete tax neutrality. The effective date of these changes to be notified after Presidential assent; State amendments will take effect simultaneously
Interim Appellate Authority for Advance Ruling—Tribunal Empowered as Interim National Appellate Authority—Section 101A
- Section 101A deals with the constitution of the National Appellate Authority for Advance Ruling (NAAAR). Since NAAAR has not yet been constituted, conflicting AAR rulings across states create confusion.
- What Changed GST Amendments with Implications under Finance Bill 2026? Until the National Appellate Authority for Advance Ruling is constituted, the government can appoint an interim appellate authority.
- Proposed Change under Clause 140
A new Section 101A(1A) is inserted whereby the GST Appellate Tribunal will act as the National Appellate Authority until NAAAR is constituted. Key Points related to that: The Tribunal will hear appeals arising from conflicting AAR rulings. Provisions regarding the constitution, appointment, and tenure of NAAAR members. Subsections 2–13 will not apply to the Tribunal. This is clearly a temporary/stopgap arrangement. 1 April 2026 (as per Clause 2(a) of the Finance Bill, 2026).
- The practical impact of GST amendments with implications under Finance Bill 2026 in this reference is reduced contradictory rulings across states. And it enhances clarity for businesses operating in multiple states. Also improves legal certainty for cross-state transactions and complex tax questions.
Intermediary Services – Place of Supply Shifted
- What changed under GST Amendments with implications under Finance Bill 2026 related to the place of supply for intermediary services is now the location of the recipient. And such services can now qualify as exports if the recipient is located outside India.
Major Amendment on Place of Supply for Intermediary Services – Section 13(8)
- Under present Section 13(8)(b), the place of supply for intermediary services is the location of the supplier, leading to taxation of export-like transactions, denial of zero-rated benefit, and litigation and dispute. This provision has been one of the most controversial areas in GST law.
- Proposed Amendment (Clause 141) : Section 13(8)(b)—relating to intermediary services—is omitted.
- New Position : Intermediary services will now fall under Section 13(2) (general rule):
- Place of supply = Location of the recipient
- If recipient location unavailable → Location of supplier
- Impact of change in case Place of Supply for Intermediary Services: Practical Impact of GST Amendments with Implications under Finance Bill 2026 Intermediary services provided to foreign clients will qualify as export of services. GST will not apply if foreign exchange is received and other export conditions are satisfied. Huge relief to BPOs, KPOs, Marketing support services, Back-office service providers and Overseas procurement/sales support agencies
- This GST amendment eliminates years of disputes around “intermediary” classification, place of supply, and export eligibility and improves the competitiveness of India’s service sector.
- Overall Impact & Policy Direction: The Finance Bill 2026 reflects a strong policy intent toward simplification of GST, litigation reduction, trade facilitation, export promotion, and liquidity support for businesses. These amendments will significantly reduce the compliance burden and align GST law with global best practices.
- This change resolves disputes pending for years. : The Finance Bill, 2026, proposes high-impact reforms in GST law focused on reducing litigation, aligning GST with commercial practices, enhancing export competitiveness, improving liquidity for businesses, and strengthening the refund ecosystem.
