Finance Ministry sets Nov 1 to implement simplified post-sale discount rules, 90% provisional refunds for IDS

The Finance Ministry has set November 1 as the date for implementation of Finance Act provisions related to post-supply discounts, provisional refunds under the inverted duty structure, and removal of the ₹1,000 minimum refund threshold for export of goods made with payment of tax.

These changes are being brought through amendment in GST Act, prescribed in the Finance Act, 2026. Now, an amendment removed the requirement of establishing such discounts through an agreement entered at or before the time of supply.

Accordingly, post-supply discounts may now qualify for exclusion from the value of supply where the supplier issues a credit note and the recipient reverses the attributable input tax credit in accordance with Section 34 of the CGST Act, 2017.

Further, Section 34(1) of the CGST Act, 2017 has also been amended to recognise credit notes issued in respect of discounts covered under Section 15(3)(b), thereby aligning the credit note provisions with the valuation mechanism under the GST law.

According to Rahul Shekhar, Partner - Indirect Tax, Nangia Global, businesses can now issue GST credit notes for eligible post-sale discounts, subject to the recipient reversing the corresponding ITC. The change will enable businesses to offer discounts to dealers to drive sales while also availing the benefits associated with credit notes.

Previously, in the absence of a clearly documented agreement, the issuance of such credit notes resulted in an additional cost to the business. “The amendment is expected to bring relief to industries such as FMCG, pharma, retail, consumer durables, where dealer incentives and volume-based discounts are common,” he said.

Meanwhile, November 1 will also be the date to implement amendment in the law to ensure faster refunds for eligible businesses facing an inverted duty structure. An inverted duty structure generally arises where the tax rate on inputs is higher than the tax rate on outward supplies, resulting in accumulation of unutilised input tax credit.