Finance Bill, 2026: Key GST Reforms that will Reshape Compliance and Cash Flows

The Finance Bill, 2026 introduces a series of targeted yet impactful amendments to the GST and indirect tax framework, with a clear policy focus on compliance simplification, liquidity support, and ease of doing business.

1. Post-Sale Discounts: Long-Awaited Clarity Arrives

🔹 What was the issue?

Under Section 15(3)(b) of the CGST Act, post-supply discounts were excluded from taxable value only if they were pre-agreed at or before supply and linked to specific invoices. This rigid requirement resulted in frequent disputes and denial of tax benefits for commercial, post-sale incentive structures.

🔹 What is proposed?

• • Removal of the requirement that post-sale discounts must be pre-agreed.
  • Post-sale discounts can now be excluded from taxable value when a credit note is issued, subject to reversal of proportionate ITC by the recipient.
  • Section 34 is proposed to be amended to explicitly recognize post-sale discounts as a valid ground for issuing credit notes.

🔹 Impact

✔ Reduced litigation
✔ Alignment of GST law with business realities

2. Provisional Refunds Extended to Inverted Duty Structure (IDS)

🔹 Current position

Provisional refund of up to 90% under Section 54(6) was available only for zero-rated supplies, leaving IDS taxpayers facing prolonged refund delays.

🔹 Proposed amendment

• • Provisional refund mechanism to be extended to refunds arising from inverted duty structure.
  • Up to 90% of the refund amount to be released upfront, subject to risk-based checks.

🔹 Impact

✔ Significant liquidity relief
✔ Reduced refund pendency

This marks a major policy shift in favor of manufacturing and domestic supply chains.

3. Removal of ₹1,000 Threshold for Export Refunds

🔹 The problem

Section 54(14) restricted refunds below ₹1,000 per tax head, disproportionately affecting:

• • Small exporters
  • E-commerce sellers
  • Courier and postal exports

🔹 What changes?

• Refunds on exports with payment of tax will be excluded from the ₹1,000 minimum threshold.

🔹 Why it matters

✔ Encourages MSME and cross-border e-commerce exports
✔ Aligns India with international best practices
✔ Improves cash flow predictability for exporters

4. Faster Resolution of Conflicting Advance Rulings

🔹 Background

Although the CGST Act provides for a National Appellate Authority (NAA), it has not been constituted, leading to delays where conflicting rulings arise across States.

🔹 Proposed solution

• • Insertion of Section 101A(1A) empowering existing authorities (including tribunals) to act as the NAA from 1st April 2026.
  • Ensures uninterrupted appellate mechanism until a formal NAA is constituted.

🔹 Impact

✔ Reduced jurisdictional conflicts
✔ Faster dispute resolution

5. Intermediary Services: Major Relief for Export of Services

🔹 Existing challenge

Section 13(8)(b) of the IGST Act deemed the place of supply for intermediary services as the location of the supplier, effectively denying export status even when services were provided to foreign clients.

🔹 Proposed reform

• • Omission of Section 13(8)(b).
  • Place of supply to be determined under the general rule (Section 13(2)), i.e., location of the recipient.

🔹 Impact

✔ Intermediary services can qualify as exports
✔ Zero-rated benefits restored
✔ Indian service providers become globally competitive

This is one of the most industry-welcomed amendments in recent years.

Concluding Thoughts

The Finance Bill, 2026 reflects a maturing GST regime, where policy intent is clearly shifting from strict interpretation to practical facilitation. By resolving legacy issues around discounts, refunds, exports, and intermediary services, the government has sent a strong signal of its commitment to certainty, liquidity, and business growth.

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