GST: Changes to post-supply discounts start 1 November

The Central Government has set 1 November 2026 as the commencement date for sections 153 to 155 of the Finance Act, 2026, bringing into force amendments concerning post-supply discounts, credit notes and refunds under the Central Goods and Services Tax (CGST) Act, 2017. The Ministry of Finance fixed the date through Notification No. 03/2026-Central Tax, dated 26 October 2026.

The notification, issued under the Department of Revenue’s Central Board of Indirect Taxes and Customs, invokes section 1(2)(b) of the Finance Act. Its operative provision sets a common commencement date for the three sections; it does not reproduce the amendments or set out a separate implementation procedure.

The changes concern different parts of GST administration. Sections 153 and 154 link the treatment of discounts given after a supply to credit notes and the recipient’s reversal of related input tax credit. Section 155 changes provisions governing refunds, according to the Finance Act extract reproduced by GST India Online.

Post-supply discounts linked to credit notes and credit reversal

Section 153 of the Finance Act replaces clause (b) of section 15(3) of the CGST Act. Section 15 concerns the value of a taxable supply, as listed in India Code’s compilation of the CGST Act.

The replacement clause addresses a discount given after goods or services have been supplied. It requires the supplier to issue a credit note for that discount and the recipient to reverse the input tax credit attributable to it, in accordance with section 34.

Input tax credit is credit for tax paid on purchases that can be used against tax payable on supplies. In the discount provision, reversal means taking back the credit attributable to the discount rather than retaining that portion of the purchase-related tax credit.

The statutory wording connects the supplier’s documentation with the recipient’s tax treatment. A credit note alone is not the whole condition described in the replacement clause: the recipient’s corresponding reversal also forms part of it.

Section 154 makes a related amendment to section 34(1), which deals with credit notes. The Finance Act adds an express reference to a discount covered by section 15(3)(b), bringing that category of post-supply discount into the credit-note provision.

The two amendments therefore operate together. One sets out the condition for the discount under the taxable-value provision; the other adds the corresponding wording to the credit-note provision. Neither amendment, as reproduced in the Finance Act extract, sets a monetary amount or percentage for the discount.

The 26 October notification supplies the commencement date for both changes. It is not itself a tax-rate notification, and its text does not announce a change in GST rates.

Refund amendment covers unutilised input tax credit

Section 155 amends two parts of section 54 of the CGST Act, the provision governing refunds.

The first amendment adds unutilised input tax credit allowed under clause (ii) of the first proviso to section 54(3) to the wording of section 54(6). The GST Council Secretariat’s March 2026 newsletter described this legislative change as concerning provisional refunds of unutilised input tax credit in cases of an inverted duty structure.

An inverted duty structure broadly describes a situation in which the tax rate on inputs is higher than the rate on the resulting supplies, leaving credit unutilised. A provisional refund is an interim refund rather than the final determination of the claim.

The amendment is tied to the category identified in section 54(3); its wording does not extend provisional treatment indiscriminately to every kind of unutilised credit. The commencement notification also does not specify a refund percentage, processing deadline or application form.

The second amendment inserts an exception into section 54(14) for cases where a refund of tax is claimed on goods exported out of India with payment of tax. This is a separate change within the same Finance Act section, distinct from the provision concerning provisional refunds of unutilised credit.

The notification brings both parts of section 155 into force on the same date.

October notification follows the earlier legislative changes

The GST Council Secretariat’s March 2026 newsletter said the Finance Act received presidential assent on 30 March 2026. At that stage, it described the post-supply discount and inverted-duty provisional-refund amendments as changes that would become effective on dates to be notified.

The 26 October notification is the subsequent commencement instrument for sections 153 to 155. The distinction is between the legislation containing the amendments and the government fixing when these particular provisions take effect.

Its scope is confined to those three sections of the Finance Act. The notification does not separately explain how discounts relating to earlier supplies or refund applications already pending on 1 November 2026 are to be treated.