The Finance Bill, 2026 proposes select amendments to the CGST Act, 2017 and IGST Act, 2017. These changes are procedural and clarificatory in nature, addressing valuation mechanics, refund processes, appellate arrangements, and place of supply rules, without altering GST rates or tax base.
Summary of GST Amendments
CGST Act, 2017
- Amendment to treatment of post-sale discounts
- Alignment of credit note provisions with valuation rules
- Extension of provisional refund to inverted duty structure cases
- Removal of threshold limit for sanction of export refunds
- Interim empowerment of authority for advance ruling appeals
IGST Act, 2017
- Omission of special place of supply rule for intermediary services
1. Post-Sale Discounts and Valuation (Section 15, CGST Act)
What is proposed
Section 15(3) of the CGST Act is amended to remove the requirement that post-sale discounts must be linked to a pre-existing agreement, where:
- A credit note is issued under section 34, and
- The recipient reverses the proportionate ITC.
The amendment expressly links valuation exclusion to ITC reversal, not contractual timing.
Implications
- Valuation clarity: Discounts decided after supply can be excluded from taxable value if statutory conditions are met.
- No blanket exemption: Discounts are not automatically excluded; ITC reversal by the recipient remains mandatory.
- Litigation reduction: The amendment addresses interpretational disputes.
2. Alignment of Credit Note Provisions (Section 34, CGST Act)
What is proposed
Section 34 is amended to include reference to section 15, ensuring that credit note adjustments operate consistently with valuation provisions.
Implications
- Statutory consistency: Credit notes affecting taxable value are now explicitly tied to valuation rules.
- No new entitlement: The amendment does not expand the scope of credit notes; it only aligns cross-references.
3. Provisional Refund for Inverted Duty Structure (Section 54(6), CGST Act)
What is proposed
Section 54(6) is amended to extend provisional refund (up to 90%) to refund claims arising from inverted duty structure, which were earlier excluded.
Implications
- Faster access to funds: Eligible taxpayers may receive provisional refunds pending final verification.
- Subject to safeguards: The amendment does not dilute scrutiny or eligibility conditions under section 54.
4. Removal of Threshold for Export Refund Sanction (Section 54(14), CGST Act)
What is proposed
Section 54(14) is amended to remove the threshold limit for sanction of refund claims relating to exports made on payment of tax.
Implications
- Uniform treatment: Export refund sanction is no longer dependent on value-based thresholds.
- Procedural simplification: This affects sanction mechanics only, not refund eligibility.
5. Interim Arrangement for Advance Ruling Appeals (Section 101A, CGST Act)
What is proposed
A new sub-section 101A(1A) is inserted to empower the Central Government, by notification, to authorise an existing authority or tribunal to hear appeals under section 101B, pending constitution of the National Appellate Authority for Advance Ruling. This amendment comes into effect from 1 April 2026.
Implications
- Transitional mechanism: Enables disposal of advance ruling appeals during the interregnum.
- Limited scope: Applies only to advance ruling appeals, not general GST appeals.
6. Place of Supply for Intermediary Services (Section 13, IGST Act)
What is proposed
Clause (b) of section 13(8) of the IGST Act is omitted. Consequently, the place of supply for intermediary services will be determined under the default rule in section 13(2), i.e., the location of the recipient.
Implications
- Change in legal rule: The special deeming provision is removed.
- Export status not automatic: Whether a supply qualifies as export will still depend on fulfilment of all conditions under section 2(6) of the IGST Act.
- Litigation relevance: While the change addresses a contentious issue, the Memorandum does not explicitly reference court rulings or constitutional concerns.
Effective Dates
| Amendment | Effective date |
| CGST valuation, refund, credit note amendments | To be notified |
| Interim appellate authority (Section 101A) | 1 April 2026 |
| IGST intermediary services amendment | To be notified |
Conclusion
The GST amendments proposed in Union Budget 2026-27 are technical and process-oriented, aimed at correcting structural and procedural issues rather than expanding or contracting the tax base. From a legal standpoint, the changes:
- Clarify valuation mechanics
- Improve refund cash flow processes
- Provide interim appellate functionality
- Realign place of supply rules for intermediary services
They should be read as refinements within the existing GST framework, with practical impact depending on subsequent notifications and implementation.
Related Posts: