The new Goods and Services Tax (GST) reforms for post-sale discounts and speeding up provisional refunds for businesses facing inverted duty structures will come into effect from November 1, 2026, as the Central Board of Indirect Taxes and Customs (CBIC) has issued the required notifications dated Oct 26.
Simplified rules and credit note provisions that come into effect from next month will make it easier for distributors and retailers to manage discounts.
Businesses facing an inverted duty structure (where GST on inputs is higher than GST on outputs) can claim 90 per cent provisional refunds upfront, subject to risk checks.
In a major relief for small exporters, the previous minimum limit of ₹1,000 for tax-paid export refunds is removed, allowing small courier and postal exporters to claim refunds without a minimum threshold.
As far as intermediary services are concerned, the “place of supply” for services provided through intermediaries shifts to the location of the service recipient rather than the intermediary, giving Indian service exporters better clarity.
The next set of changes, which involve major structural and procedural reforms requiring formal legislative amendments to the GST laws, are targeted for implementation on April 1, 2027.
The decisions stem from the 57th GST Council meeting held on October 8, 2026, in New Delhi under the chairmanship of Union Finance and Corporate Affairs Minister Nirmala Sitharaman. The meeting concentrated on process and structural reforms to cut taxpayer compliance burden, smooth the flow of input tax credit (ITC), and speed up refunds.
The rollout of these GST reforms will happen in stages based on the system upgrades needed, a senior official said.
Automated sanctioning of refunds will begin after November 1, where applicable. This applies only to future refund claims, not to those already pending. The focus is on faster processing once the systems are ready.
Measures that require amendments to the Central and state GST laws will take effect after the necessary legislative steps. Notably, the Council has set April 1, 2027, as the target date. These include changes to arrest provisions, rationalisation of prosecution thresholds, modifications to e-way bill rules, and a minimum threshold of ₹10,000 for issuing show-cause notices.
A senior official clarified that arrests already made will not be affected by the new rules. The Council has decided to remove certain arrest provisions from the law, but these changes will apply only from April 1, 2027. The department is examining interim guidance through instructions, though no final decision has been taken yet.
