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GST AMENDMENTS – FINANCE BILL, 2026 (CHAPTER V)
Provision | Amendment | Earlier Position | Impact |
CGST Act – Section 15 (Valuation: Post-supply discounts) | Requirement of linking post-supply discounts to a pre-agreed contract and specific invoices is removed, subject to reversal of ITC by the recipient through credit note under Section 34. | Post-supply discounts were deductible only if agreed prior to supply and specifically linked to relevant invoices, along with proportionate ITC reversal. | Brings significant relief for commercial discounts (volume/year-end discounts); reduces valuation disputes and litigation |
CGST Act – Section 34 (Credit Notes) | Section 34 amended to explicitly cover post-supply discounts referred to in Section 15(3)(b) | No explicit statutory linkage between Section 15 discounts and issuance of credit notes under Section 34. | Provides clarity and statutory alignment; strengthens legality of credit notes issued for post-supply discounts. |
CGST Act – Section 54 (Refunds) | (i) Provisional refund extended to inverted duty structure cases; (ii) Threshold limit for refund claims on exports with payment of tax removed. | Provisional refunds were largely restricted to zero-rated supplies; refund claims were subject to a minimum threshold. | Improves cash flow for manufacturers and exporters; reduces working capital blockage. |
CGST Act – Section 101A (Advance Ruling Appeals) | New sub-section (1A) empowers Government to notify an existing authority (including a Tribunal) to hear appeals until National Appellate Authority is constituted. | No functional appellate forum for conflicting Advance Rulings due to non-constitution of National Appellate Authority. | Provides interim appellate remedy; reduces uncertainty arising from conflicting Advance Rulings. |
IGST Act – Section 13 (Place of Supply: Intermediary Services) | Clause (b) of Section 13(8) omitted; intermediary services to follow general place of supply rule under Section 13(2). | Place of supply deemed to be location of supplier, resulting in GST on many cross-border intermediary services. | Major relief for service exporters; aligns GST with international VAT principles and reduces export taxation. |
CUSTOMS AMENDMENTS – FINANCE BILL, 2026 (CHAPTER V)
Provision | Amendment | Impact |
Customs jurisdiction extended beyond territorial waters of India for fishing and fishing-related activities. | Enables effective regulation and enforcement over fishing activities in extra-territorial waters | |
New definition of “Indian-flagged fishing vessel” inserted: “Indian-flagged fishing vessel” means a vessel which is used or intended to be used for the purpose of fishing in the seas and entitled to fly the flag of India;”. | Provides legal certainty and supports enforcement of new fishing-related customs provisions. | |
Penalty paid under Section 28(5) deemed to be a charge for non-payment of duty. | Strengthens recovery mechanism and priority of government dues. | |
(i) Advance rulings valid for five years or till change in law/facts; (ii) existing rulings can be extended for five years on request. | Enhances certainty and predictability for importers/exporters relying on advance rulings. | |
Customs Act – Section 56A (New) | Special provisions introduced for fishing by Indian-flagged vessels beyond territorial waters; (i) fish brought to India exempt from duty; (ii) fish landed at foreign ports treated as exports. | Boosts Indian fishing industry; provides duty exemption and export benefits. |
Customs Act – Section 67 (Substituted) | Prior permission of proper officer no longer required for transfer of goods between warehouses. | Simplifies warehousing procedures; reduces compliance burden and operational delays |
Board empowered to frame regulations for custody of goods imported/exported by post or courier. | Enables better regulation of courier and postal imports/exports. | |
Tariff rate revisions, new tariff entries, and composite duties introduced with effect from 1 April / 1 May 2026, as applicable. | May impact import costs, pricing, and supply chain decisions; requires re-evaluation of landed cost |
CONSEQUENTIAL NOTIFICATIONS (INDIRECT TAXES)
A. CENTRAL EXCISE NOTIFICATIONS
Notification | Amendment | Impact |
National Calamity Contingent Duty (NCCD) on chewing tobacco, jarda scented tobacco and other tobacco products capped at 25% with effect from 1 May 2026. | Increases duty incidence on specified tobacco products; manufacturers need to realign pricing and duty computation | |
(i) Extension of concessional excise regime timelines from 2026 to 2028; (ii) New entry inserted for blended CNG with Biogas/CBG, prescribing 14% excise duty with valuation exclusions. | Promotes use of cleaner fuels; provides valuation clarity and concessional framework till 2028. | |
Rescission of Notification No. 05/2023–Central Excise with effect from 2 February 2026. | Withdraws earlier excise concessions; taxpayers must reassess eligibility and duty exposure |
B. CUSTOMS NOTIFICATIONS
Notification | Amendment | Impact |
Validity of multiple exemption notifications extended from 31 March 2026 to 31 March 2028; inclusion of Battery Energy Storage Systems (BESS); rationalisation and sunset clauses introduced. | Provides long-term certainty to exporters and green-energy sector; enables continued duty benefits till 2028. | |
Extensive rationalisation of exemption entries under Notification 45/2025–Customs: multiple entries omitted, sunset dates extended to 31 March 2028, and new concessional entries added for solar, wind, nuclear, defence and electronics sectors. | Major restructuring of customs exemption landscape; businesses must reassess classification, eligibility and cost structures. | |
Amendments to Notifications 11/2018-Customs and 11/2021-Customs including tariff inclusions, omissions, and revised concessional rates. | Impacts imports of toys, spent catalysts, tyres and other specified goods; requires updated customs planning. | |
Substitution of Baggage Rules, 2016 with Baggage Rules, 2026. | Aligns baggage exemptions with updated policy framework; impacts passenger imports. | |
Rescission of Notification Nos. 11/2004-Customs and 27/2016-Customs. | Withdrawal of legacy exemptions; increases duty exposure unless covered elsewhere | |
Deferred payment of import duty facility extended to Eligible Manufacturer Importers up to 31 March 2028. | Enhances liquidity for manufacturers by deferring duty outflow. | |
Amendment to Deferred Payment of Import Duty Rules, prescribing revised monthly payment timelines. | Provides procedural clarity and certainty in duty payment scheduling. | |
Baggage Rules, 2016 are superseded and replaced with Baggage Rules, 2026, prescribing revised duty-free allowances, detailed eligibility conditions, new annexures, appendices, and expanded list of household articles under Transfer of Residence. | Comprehensive overhaul of baggage regime; provides clarity on allowances, strengthens compliance, and modernises passenger facilitation while tightening misuse risks | |
Introduction of Customs Baggage (Declaration and Processing) Regulations, 2026, replacing multiple legacy regulations; mandates electronic baggage declaration via ICEGATE / ATITHI platform with risk-based verification | Digitises baggage processing end-to-end; reduces manual interface, enhances risk management, and improves passenger experience while increasing compliance discipline.
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CBIC Circulars issued on 1 February 2026 (Customs)
Circular No. & Date | Subject / Key Clarification | What the Circular Provides | Practical Impact for Trade & Professionals |
Circular No. 02/2026-Customs (01.02.2026) | Clarification on “RPA (Remote Pilot Aircraft) for military use” | Clarifies that the term RPA in Notification No. 45/2025-Customs includes drones, UAVs and UAS, irrespective of nomenclature, provided imports are for defence purposes and supported by MoD certification. | Removes ambiguity on scope of exemption; prevents denial of BCD/IGST exemption merely due to differing terminology. Helpful for defence PSUs, OEMs and importers of unmanned aerial systems. |
Deferred Payment of Import Duty – extension and expansion | (i) Extends deferred payment period from 15 days to 30 days; (ii) Introduces a new class of “Eligible Manufacturer Importers”; (iii) Facility available up to 31 March 2028. | Improves cash-flow efficiency for importers; manufacturers get structured access to deferred duty regime. Compliance teams must track revised timelines to avoid interest exposure | |
Master Circular – Baggage Rules, 2026 | Consolidates statutory provisions and operational instructions for implementation of Baggage Rules, 2026 and Customs Baggage (Declaration & Processing) Regulations, 2026; supersedes 35+ legacy circulars/instructions (Annexure-A). | Single authoritative reference on passenger baggage; ensures uniform application across ports; reduces interpretational disputes and outdated practices. Critical for airlines, airports and frequent travellers. | |
Expansion of SWIFT 2.0 – onboarding of PGAs | Onboards COSCO, WCCB, Textile Committee and MeitY on SWIFT 2.0; introduces unified data fields, standardised document codes and digital integration of licences/NOCs with Bills of Entry. | Major procedural reform: reduces physical interface, enables single-touch-point clearance and increases data discipline. Importers must align internal documentation and filing processes with SWIFT 2.0 requirements. | |
Automation of import & export processes | Introduces auto goods registration, auto Out of Charge (OOC) for imports and auto Let Export Order (LEO) for exports; extends benefits to AEO T2/T3, Eligible Manufacturer Importers and DPD importers. | Significant trade facilitation measure: faster clearance, reduced dwell time and minimal officer interface. However, risk-based “HOLD” powers retained — compliance robustness remains critical. | |
E-scheduling of examination & Body Worn Cameras | Mandates system-based scheduling of cargo examination on ICEGATE 2.0 and mandatory BWC video recording during physical examination from 01.04.2026. | Enhances transparency, audit trail and litigation defensibility; reduces subjective examination disputes. |