Home Taxes GST Budget 2026 – Goods and Service Tax (GST) Changes and Amendments

Budget 2026 – Goods and Service Tax (GST) Changes and Amendments

February 1, 2026

Budget 2026 – All Key GST Amendments Explained in Simple Words

Budget 2026 brings a focused set of changes in the GST law under the CGST Act, 2017 and IGST Act, 2017. These changes mainly impact valuation of supplies (post‑sale discounts), refunds, appellate mechanism and the place of supply rules for intermediary services.

Unless specifically mentioned, these amendments will take effect from the date they are notified, broadly in sync with similar amendments by States and Union Territories.

1. Amendments in the CGST Act, 2017

1.1 Valuation and post‑sale discounts – Section 15(3)

What changes in law:
Sub‑section (3) of section 15 of the CGST Act, 2017 is being amended. The change does two things:

It removes the strict requirement that a post‑sale discount must be linked to a pre‑existing agreement.
It now specifically refers to the issuance of a credit note under section 34 where the recipient reverses the related input tax credit (ITC).

What this means in practice:

Suppliers and recipients can agree on commercial discounts even after supply, and adjust value through GST credit notes, as long as the buyer reverses ITC proportionately.
This relaxes the earlier rigid view that only discounts agreed upfront in writing and linked to invoices could reduce transaction value.

1.2 Clear linkage between valuation and credit notes – Section 34

What changes in law:
Section 34 of the CGST Act, 2017 (which deals with credit and debit notes) is being amended to include an explicit reference to section 15.

Why this is important:

The law now clearly ties value adjustments under section 15 (like post‑sale discounts) to the mechanism of credit notes under section 34.
This strengthens the legal basis to reduce output tax via credit notes when conditions under section 15 are satisfied and ITC is duly reversed by the recipient.

1.3 Provisional refund now also for inverted duty – Section 54(6)

What changes in law:
Sub‑section (6) of section 54 is being amended to extend the benefit of provisional refund to refunds arising out of inverted duty structure.

Currently, provisional refund (typically 90% upfront) is primarily associated with certain zero‑rated supplies such as exports. After the amendment, cases where refund arises due to higher tax rate on inputs compared to outputs (inverted duty) can also be granted provisional refund.

Impact for taxpayers with inverted duty:

Faster release of a major portion of refund, improving working capital for businesses suffering from accumulation of ITC due to rate inversion.
Reduced cash‑flow stress for sectors commonly falling in inverted duty scenarios, subject to rules and notifications.

1.4 Threshold limit removed for certain export refunds – Section 54(14)

What changes in law:
Sub‑section (14) of section 54 is being amended to remove the threshold limit for sanction of refund claims in cases where goods are exported out of India with payment of tax.

Earlier, there existed a threshold for sanctioning such refund claims; after this change, that threshold will no longer apply.

Practical effect:

All export refund claims (where goods are exported on payment of IGST and refund is claimed thereafter) will be processed without any minimum monetary threshold barrier.
This is expected to simplify and standardise the treatment of such export refunds across different claim sizes.

1.5 Interim arrangement for National Appellate Authority – Section 101A(1A)

What changes in law:
A new sub‑section (1A) is being inserted in section 101A of the CGST Act, 2017. It provides that:

Pending constitution of the National Appellate Authority, the Central Government may, by notification, empower an existing Authority to hear appeals under section 101B.
The term “existing Authority” is clarified, via an Explanation, to include a tribunal as well.
Where a Tribunal has been so empowered under section 101A(1A), sub‑sections (2) to (13) of section 101A shall not be applicable to that Tribunal.

This specific amendment is stated to come into effect from 01.04.2026.

Why this matters:

It ensures that an appellate forum is available for specified appeals even if the National Appellate Authority is not yet formally set up.
It gives flexibility to the Government to utilise existing tribunals or authorities during the transition phase.

2. Amendments in the IGST Act, 2017

2.1 Place of supply for intermediary services – Section 13(8)(b) omitted

What changes in law:
Clause (b) of sub‑section (8) of section 13 of the IGST Act, 2017 is being omitted.

Currently, this clause deems the place of supply for “intermediary services” to be the location of the supplier of services. Because of this, many intermediary services provided from India to foreign clients are treated as taxable in India, and not as exports.

After omission of section 13(8)(b), the place of supply for intermediary services will be determined as per the default rule under section 13(2) – i.e., generally, the location of the recipient of services.

Practical implications:

Intermediary services rendered from India to recipients located outside India may qualify as exports of services, subject to fulfilment of all export conditions.
This can reduce tax cost and disputes for commission agents, brokers, and other intermediaries serving offshore clients.
It aligns the place of supply treatment of intermediaries with the general cross‑border services principle of taxing at recipient’s location.

3. Quick Reference – Summary Table of All Amendments

Sl. No.	Provision	Nature of Amendment	Key Effect for Taxpayers
1	Section 15(3), CGST	Removes strict requirement of linking post‑sale discount to prior agreement; refers to section 34 credit note and ITC reversal.	Greater flexibility for post‑sale discounts, provided credit note is issued and recipient reverses ITC.
2	Section 34, CGST	Inserts reference to section 15.	Clearly links valuation adjustments with credit note mechanism under GST.
3	Section 54(6), CGST	Extends provisional refund facility to refunds arising from inverted duty structure.	Faster refunds and better cash‑flow for businesses facing inverted duty accumulation.
4	Section 54(14), CGST	Removes threshold limit for sanction of refund in case of export of goods with payment of tax.	Uniform sanction of such export refunds, irrespective of claim amount.
5	Section 101A(1A), CGST	Inserts new sub‑section allowing Government to empower an existing Authority/Tribunal for appeals u/s 101B; excludes sub‑sections (2)–(13) where Tribunal is so empowered; effective 01.04.2026.	Ensures availability of an interim appellate forum till National Appellate Authority is constituted.
6	Section 13(8)(b), IGST	Omission of clause (b); intermediary services’ place of supply to be determined under section 13(2).	Intermediary services to foreign recipients may qualify as exports; reduces domestic levy in many cases.

4. Effective Dates and Action Points

Except where a specific date is mentioned (like 01.04.2026 for the new section 101A(1A)), the amendments will come into force from dates notified by the Government, broadly aligned with State and UT amendments.

Businesses should:

Review pricing and discount policies for alignment with the revised section 15(3) and section 34 framework.
Re‑evaluate refund strategies, especially in inverted duty and export‑with‑tax scenarios.
For intermediary services, re‑examine contracts with overseas clients to assess export‑of‑service eligibility once section 13(8)(b) is omitted.