TaxTMI 
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TaxTMI 
CLAUSE BY CLAUSE ANALYSIS OF PROPOSED GST AMENDMENTS (PART-1)
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....LAUSE BY CLAUSE ANALYSIS OF PROPOSED GST AMENDMENTS (PART-1)<br>By: - Dr. Sanjiv Agarwal <br>Goods and Services Tax - GST<br>Dated:- 17-2-2026<br>Finance Bill, 2026 proposals for amendment in tax laws seek to make trade and commerce easier, facilitating exports, encouraging sustainable business practices and also at the same time protecting tax revenue. On GST front, few crucial changes have been proposed in CGST and IGST laws for simplification, removing ambiguities besides making compliance and understanding easier. These inter alia, relate to: • Valuation vis-à-vis post sale discounts • Issuance of credit notes • Provisional refunds in cases of inverted duty structure • IGST r....
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....efunds • Constitution of National Appellate Authority for Advance Ruling (NAAAR) • Place of supply for supply of exports / imports through intermediaries (IGST) There is no proposal for GST rate change or rationalization thereof as such an exercise was undertaken in October, 2025 only. Bird's eye view of Proposed Changes Following is the snapshot of GST related changes (CGST & IGST) in the Finance Bill, 2026 (FB): S. No. FB Clause Section Effected Nature of Change Effective date Change in brief 1. 137 15 (CGST) Section 15(3)(b) substituted w.e.f. notified date after enactment Valuation of taxable supply- delinking post sale discount with agreement / invoices for credit n....
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....otes 2. 138 34 (CGST) Amendment w.e.f. notified date after enactment Credit notes - reference to discount u/s 15(3)(b) for issuing credit notes for post supply discounts 3. 139 54 (CGST) Amendment w.e.f. notified date after enactment Refund of tax - provisional refund to be made for refunds due to inverted duty structure (sub-section 6); Removal of limits for refunds arising from export of goods with payment of tax (sub section 14) 4. 140 101A (CGST) New sub-section (1A) inserted w.e.f. notified date after enactment Constitution of National Appellate Authority for Advance Ruling - Government may notify any existing authority including GSTAT to hear appeal till National Authority is co....
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....nstituted. 5. 141 13 (IGST) Section 13(8) (b) omitted 1.4.2026 Place of supply in relation to 'intermediary' is omitted to imply that place of supply in such cases shall be location of recipient of services. Valuation, Post Sale Discount and Credit Notes The Finance Bill, 2026 proposes amendments in section 15 and 34 of CGST Act 2017. Section 15: Valuation of Supplies (Clause 137 of Finance Bill, 2026) In the Central Goods and Services Tax Act, 2017, (hereinafter referred to as the Central Goods and Services Tax Act), in section 15, in sub-section (3), for clause (b), the following clause shall be substituted, namely:-- "(b) after the supply has been effected, if for such discount, a credit note has be....
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....en 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.". Sub-section (3) of section 15 of the Central Goods and Services Tax Act, 2017 is being amended to do away with the requirement of linking the post-sale discount with an agreement and to refer to issuance of credit note under section 34 where the input tax credit is reversed by the recipient. According to Notes on Clauses to Finance Bill, 2026, the objective of amendment by clause 137 of the Bill is to amend sub-section (3) of section 15 of the Central Goods and Services Tax Act to do away with requirement of linking the post-sale discount with an agreeme....
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....nt specifically linked to relevant invoices and to refer to issuance of credit note under section 34 where the input tax credit is reversed by the recipient. Presently, section 15(3) of CGST Act, 2017 provides as follows: (3) The value of the supply shall not include any discount which is given-- (a) 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 (b) after the supply has been effected, if- (i) 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 (ii) input tax credit as is attributable to the discount on the basis of document issued by the sup....
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....plier has been reversed by the recipient of the supply. Post-sale discount is the discount given by businesses after the sales or supplies are made. While GST is payable on the valuation at the time of supply of goods, any post-sale discount given to the buyer, it results in a situation wherein GST has been paid in excess of what is actually payable. This excess tax paid is equivalent to the tax payable on the discount component offered post-sales. It is a common business or trade practice in India as well as globally to give post-sales discount. It is more in vogue in industries such as automobiles, consumer goods, FMCG goods, textiles, pharmaceuticals and so on. To give and document the post-sale discount transactions, credit note is i....
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....ssued by the supplier to reduce the tax liability and account for. However, this required a proper documentation such as pre-agreed discount duly documented by way of agreement entered into at or before the time of supply of goods and is linked to proper invoices, besides reversing the related input tax credit by the recipient. The proposed amendment makes this condition no more relevant or necessary to take benefit of post-sale discount and makes it easier for compliance, also resulting in lesser disputes in claiming the authenticity of post-sale discount. Indeed a welcome change. Thus, effectively following scenario will emerge, once the amendment is notified for enforcement. Discount given To be recorded Other condition ....
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.... • Before or at the time of supply [Section 15(3)(a)] • After the supply is effected i.e., post sales [Section 15(3)(b)] In tax invoice itself (net of discount) In credit note to be issued u/s 34 of CGST Act, 2017 (after tax invoice already issued) - Input tax credit reversal by recipient as per section 34 of CGST Act, 2017 It may be noted that the proper officer may verify the reversal of input tax credit and justification for issuance of credit note during scrutiny of GSTR-3B returns or during audit, if any. Section 34: Credit and Debit Notes (Clause 138 of Finance Bill, 2026) In section 34 of the Central Goods and Services Tax Act, 2017 in sub-section (1), after the words "both supplied are found ....
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....to be deficient", the words, brackets, letter and figures "or where a discount referred to in clause (b) of sub-section (3) of section 15 is given" shall be inserted. Section 34 of the Central Goods and Services Tax Act, 2017 is being amended so as to include the reference of section 15 in the said section. According to Notes on Clauses to Finance Bill, 2026, the objective of amendment by clause 138 of the Finance Bill is to amend section 34 of the Central Goods and Services Tax Act so as to include the reference of discount referred under clause (b) of sub-section (3) of section 15 in the said section for issuing credit notes for post-supply discounts. Presently, section 34(1) of CGST Act, 2017 provides on follows: Where one or....
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.... more tax invoices have been 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 or 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 year containing such particulars as may be prescribed. The proposed amendment would enable the supplier or taxable person to give or pass on any post-sale discount for any reason without any stringent documentation as is presently being done. T....
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....his will also reduce tax disputes considerably. The amendment in section 34(1) is of consequential effect in view of amendment in section 15(3)(b) relating to valuation of supplies in case of post-sale discounts. Post this amendment, one more condition for issuance of credit note shall be made applicable, i.e., where a discount (post-sale discount) as stipulated in section 15(3)(b) of the CGST Act, 2017 is given by the supplier, the supplier can issue a credit note(s) to the recipient for supplies made during the financial years. The other terms and conditions of section 34 relating to issuance of credit note shall continue to be applicable. (To be continued...) Dr. Sanjiv Agarwal FCA, FCS, D.Litt. =============<br>....
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