BUDGETARY CHANGES IN CGST ACT, 2017 AND IGST ACT, 2017

The Hon’ble Finance Minister submitted the budget for the year 2026-2027 among the expectations of every citizen of our country.  In this article the changes that are brought forwarded in the CGST Act and the IGST Act.  through the Finance Bill, 2026 are discussed.

Amendment to Section 15(3)

Section 15 of the CGST Act provides for the determination of value of taxable supply.  Section 15(2) of the Act provides the list of supplies to be included in the value of supply.  Likewise, Section 15(3) provides the list of supplies that cannot be included in the value of supply.

Section 15(3) provides for the non-inclusion of discount in the value of supply.  The said section15(3) provides that  

1. 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
2. after the supply has been effected, if–

1. 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
2. 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.

Clause 137 of the Finance Bill proposes to substitute a new section for the existing Section 15(3)(b) of the Act. The newly substituted section provides that the value of the supply shall not include any discount which is given after the supply has been effected, if 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 (debit/credit note).

Amendment to Section 34

Section 34 of the Act provides the procedure for the issue of debit/credit notes by the tax payer.

Section 34 (1) of the Act provides that where one or more tax invoices havebeen 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 both supplied are found to be deficient, 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 yearcontaining such particulars as may be prescribed.

Clause 138 of the Bill proposed to amend Section 34(1) by inserting the wordsor where a discount referred to in clause (b) of sub-section (3) of section 15 is given after the words as ‘both supplied are found to be deficient’ occurred in section 34(1). 

Amendment of Section 54

Section 54 of the Act provide the procedure for getting refund from the Department by the tax payers.  The Finance Bill proposed to amend Section 54(6) and 54(14) of the Act.

Section 54(6) of the Act provides that  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 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.

Clause 139(a) of the Bill proposed to insert the words ‘or of unutilised input tax credit allowed under clause (ii) of the first proviso to sub-section (3)’ after the words supply of goods or services or both.

Section 54(6) of the Act provides that notwithstanding anything contained in this section, no refund under sub-section (5) or sub-section (6) shall be paid to an applicant, if the amount is less than one thousand rupees.

Clause 139(b) of the Bill proposed to insert the words ‘,other than cases where refund of tax is claimed on account of goods exported out of India with payment of tax,’ after the words sub-section (5) or sub-section (6).

By this amendment, the limitation of Rs.1000/- for claiming refund by the exporter on account of goods exported out of India with payment of tax.

Amendment to Section 101A

Section 101A of the Act provides for the constitution of National Appellate Authority for Advance Ruling.  This Authority shall decide the disputes arised between the two Appellate Authorities of different on a subject matter. 

Clause 101A of the Bill proposed to inserted a new sub-section 101A (1A) after Section 101A (1) of the Act.  The newly inserted section 101(1A) provides that notwithstanding anything contained in sub-section (1), till the National Appellate Authority is constituted under that sub-section, the Government, may on the recommendations of the Council, by notification, empower any existing Authority constituted under any law for the time being in force to hear appeals made under section 101B and in such case, ––

1. the provisions of sub-sections (2) to (13) shall not apply; and
2. any reference to the National Appellate Authority under this Chapter shall be construed as a reference to such Authority.

Explanation.–– For the purposes of this sub-section, the expression “existing Authority” shall include a Tribunal.  

According to this section the Appellate Tribunal is made to hear the appeals of the Advance Ruling of the Appellate Authority for Advance Ruling.

Amendment of Section 13 of the IGST Act

Section 13 of the IGST Act provides for the place of supply of service where location of supplier or location of the recipient is outside India.

Clause 141 of the Bill proposed to omit the provisions of Section 13(8)(b) of the IGST Act which provides the intermediary service.  After the amendment the location of the intermediary services will not be considered as the place of supply.