GST Changes from 1 November 2026: What Businesses Must Do

GST Changes from 1 November 2026: Discounts, Credit Notes and Refunds Explained

Short answer: From 1 November 2026, four GST changes are in force under Notification No. 03/2026-Central Tax (26 October 2026):

Post-sale discounts no longer need a prior agreement or a link to specific invoices (Section 15(3)(b)).
You can issue a GST credit note for those discounts (Section 34(1)), as long as the buyer reverses the input tax credit.
90% provisional refunds now also cover inverted duty structure refunds, not just exports (Section 54(6)).
The ₹1,000 minimum no longer applies to refunds of tax paid on exported goods (Section 54(14)).

Last updated: 31 October 2026. This is a plain-language guide, not legal advice. Check the notification on the CBIC website or ask your CA before acting.

Why these GST changes matter

These changes came through the Finance Act, 2026. Sections 153 to 155 of that Act amend Sections 15, 34 and 54 of the CGST Act, and the government notified 1 November 2026 as the start date. They help businesses that give trade discounts, schemes and year-end incentives, manufacturers stuck with inverted duty, and small exporters.

GST changes from 1 November 2026: four changes covering post-sale discounts, credit notes, 90% provisional refunds for inverted duty and export refunds below ₹1,000

1. Post-sale discounts: no prior agreement needed

Before: a discount given after the sale reduced your taxable value only if it was agreed before or at the time of supply and linked to specific invoices. Many target-based or festive schemes failed this test, so suppliers paid GST on money they never received.

Now: the discount reduces the taxable value if:

you issue a credit note under Section 34, and
the buyer reverses the matching input tax credit (ITC).

Example: a distributor gives a dealer a ₹50,000 year-end target discount in November. Earlier, without a pre-agreed scheme, GST stayed payable on the full value. Now the distributor issues a GST credit note, the dealer reverses the ITC, and the taxable value comes down.

2. Credit notes now cover these discounts

Section 34(1) now expressly allows credit notes for discounts under Section 15(3)(b). Before, it only listed excess value or tax, goods returned and deficient supply.

The time limit still applies: declare the credit note by 30 November after the end of the financial year, or the annual return date, whichever is earlier.
A commercial credit note without GST is still allowed, but it does not reduce your GST.

3. 90% provisional refunds for inverted duty

Before: 90% provisional refunds under Section 54(6) were mainly for zero-rated supplies (exports and SEZ).

Now: they also cover refunds for inverted duty structure, where tax on inputs is higher than tax on outputs. This frees up working capital for manufacturers such as textiles, footwear and fertilisers. The refund amount is still worked out under Rule 89, and the normal risk checks continue.

Tip: file new inverted duty claims after 1 November 2026. Claims already pending do not automatically get the 90% payout.

4. Export refunds below ₹1,000 are now allowed

Before: no GST refund was given below ₹1,000.

Now: the ₹1,000 minimum does not apply to refunds of tax paid on goods exported out of India. This helps small exporters, courier and postal shippers, and online sellers who export small orders. Other refunds, such as excess cash ledger balances, keep the ₹1,000 limit.

What is NOT in force yet

You may see headlines about bigger GST reforms. Many are recommendations that still need notifications or law changes:

Automated refund sanction and shorter acknowledgement times (phased rollout)
Easier registration for e-commerce sellers using an operator's warehouse
Return reforms, higher show-cause and penalty thresholds (targeted for 2027)
Annual return with quarterly payment for small B2C businesses (approved in principle only)

Treat these as "coming soon" until a notification is issued.

What should your business do now?

Review your discount schemes. Plan year-end and target discounts so you can issue proper GST credit notes.
Tell your dealers and distributors that they must reverse the input tax credit on these credit notes. Without that, your tax reduction can be challenged.
Keep scheme documents (circulars, emails, target sheets) for any officer queries.
Track the credit note deadline (30 November after the year end).
Manufacturers: file fresh inverted duty refund claims after 1 November.
Small exporters: claim refunds below ₹1,000 that you skipped earlier, where allowed.
Reconcile purchases with GSTR-2B every month.

Note: GSTN also announced an e-invoice service downtime from 9 AM on 31 October to 1 PM on 1 November 2026. Plan invoicing around it.

Make GST easier with the right software

Discount schemes, credit notes and refunds are much easier when your billing is automated. Our POS and billing software and custom ERP software can generate GST invoices, credit notes and e-invoices automatically. New businesses can also read our guide to GST registration online and Udyam registration.

Frequently asked questions

What are the GST changes from 1 November 2026?

Four changes are in force: post-sale discounts no longer need a prior agreement, credit notes cover such discounts, 90% provisional refunds extend to inverted duty refunds, and the ₹1,000 minimum is removed for refunds of tax paid on exported goods.

Which notification brought these changes?

Notification No. 03/2026-Central Tax dated 26 October 2026, which brings Sections 153 to 155 of the Finance Act, 2026 into force from 1 November 2026.

Do I still need an agreement for trade discounts under GST?

Not from 1 November 2026. The discount reduces taxable value if you issue a GST credit note and the buyer reverses the related input tax credit.

Are these changes retrospective?

No. Discounts, credit notes and refunds for earlier periods follow the law as it stood at that time.

Is automated GST refund in force?

Not fully. Automated refund sanction is being rolled out in phases. Only the 90% provisional refund extension to inverted duty is in force from 1 November 2026.

Can small exporters claim refunds below ₹1,000 now?

Yes, for tax paid on goods exported out of India. Other types of refund still have the ₹1,000 minimum.

GST Changes from 1 November 2026: Discounts, Credit Notes and Refunds Explained