Click the 'View PDF' option above to download the Update.
Indirect Tax Update No. 44
Notification No. 03/2026-Central Tax dated 26 October 2026 has appointed 1 November 2026 as the effective date for implementation of the amendments introduced under Sections 153 to 155 of the Finance Act, 2026 which are discussed as under:
Amendment in Section 15(3)(b) – Post-supply discounts no longer required to be pre-agreed or linked to specific invoices
Section 15(3)(b)
(3) The value of the supply shall not include any discount which is given —
(a) before or at the time of the supply if such discount has been duly recorded in the invoice issued in respect of such supply; and
(b) after the supply has been effected, if -
such discount is established in terms of an agreement entered into at or before the time of such supply and specifically linked to relevant invoices; and input tax credit as is attributable to the discount on the basis of document issued by the supplier has been reversed by the recipient of the supply.
for such discount, a credit note has been issued by the supplier and input tax credit as is attributable to such discount has been reversed by the recipient of the supply, in accordance with the provisions of section 34.
LKS Comments:
The amendment removes the requirement that post-supply discounts must be established in terms of an agreement entered into at or before the time of such supply and specifically linked to individual invoices. However, the provision continues to use the word “discount”, therefore, the natural meaning of word and scope of the term “discount” would still require consideration.
The revised provision shifts the focus from contractual documentation to the actual issuance of a credit note and corresponding ITC reversal by the recipient.
This significantly eases GST treatment of trade discounts, volume discounts etc.
Amendment in Section 34(1) – (Specific Enabling Provision Introduced for Issuance of Credit Notes Against Post-Supply Discounts)
Section 34. Credit and debit notes. —
1) Where one or more tax invoices have been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to exceed the taxable value or tax payable in respect of such supply, or where the goods supplied are returned by the recipient, or where goods or services or both supplied are found to be deficient [or where a discount referred to in clause (b) of sub-section (3) of section 15 is given], the registered person, who has supplied such goods or services or both, may issue to the recipient one or more credit notes for supplies made in a financial year containing such particulars as may be prescribed.
LKS Comments
Post-supply discounts are now expressly recognized as a valid reason for issuance of GST credit notes.
The amendment aligns the procedural provisions of Section 34 with the revised valuation provisions under Section 15(3)(b) of the CGST Act.
Amendment in Section 54(6) – Provisional Refund of 90% Extended to Inverted Duty Structure Refund Claims
Section 54. Refund of tax. —
…
(6) Notwithstanding anything contained in sub-section (5), the proper officer may, in the case of any claim for refund on account of zero-rated supply of goods or services or both [or of unutilised input tax credit allowed under clause (ii) of the first proviso to sub-section (3)] made by registered persons, other than such category of registered persons as may be notified by the Government on the recommendations of the Council, refund on a provisional basis, ninety per cent. of the total amount so claimed, in such manner and subject to such conditions, limitations and safeguards as may be prescribed and thereafter make an order under sub-section (5) for final settlement of the refund claim after due verification of documents furnished by the applicant.
…
LKS Comments
· Taxpayers claiming refund of accumulated ITC due to inverted duty structure will now become eligible for provisional refund.
· The amendment is aimed at improving liquidity and reducing working capital blockage.
Amendment in Section 54(14)
(14) Notwithstanding anything contained in this section, no refund under sub-section (5) or sub-section (6), [other than cases where refund of tax is claimed on account of goods exported out of India with payment of tax,] shall be paid to an applicant, if the amount is less than one thousand rupees.
LKS Comments
The existing minimum refund threshold of INR 1,000 will not apply to refund claimed on account of export of goods with payment of IGST.
Thus, even small export refund claims can now be processed and sanctioned.
Discuss this topic with our GST & Indirect Tax Litigation team
Contact Us