Introduction
The Budget, presented by the Finance Minister of India every year holds important features that affect the country from the micro to macro level. This analysis pertains specifically to amendments made to the Indirect Tax laws, more specifically GST Laws. There have been 6 amendments made to the GST Act, with 5 amendments to the CGST Act, 2017 and 1 to the IGST Act, 2017. Narrowing down further, this work will focus on critically analysing three specific amendments, namely: amendment to section 15(3) read with section 34 and 54 of the CGST Act; amendment to section 54(6) of the CGST Act and amendment to section 13(8) of the IGST Act.
Amendment to section 15(3) read with sections 34 and 54 of the CGST Act
Section 15 of the CGST Act pertains to determination of the value of supply. Valuation of taxable supply is necessary for both the supplier and recipient since it would be the transaction value. Section 15(3) specifically pertains to exclusion of discount from the value of supply. Two kinds of discounts are excluded: One is the discount given before or at the time of supply which is noted in the invoice. For example, XYZ supplies goods for Rupees 20,000 after allowing a discount of rupees 5000 on the invoice itself. GST therefore will be charged on rupees 20,000 only. The other is discount given post the supply. This discount is further conditional on it being formally agreed through an agreement and the ITC attributable to it should be reversed by the recipient. The sub condition specified by section 15(3)(b)(i) requiring the linking of the discount with an agreement was suggested to be omitted by the GST Council through the GST Council Meeting dated 3rd September 2025 . This was duly complied by the Finance Ministry which culminated in the amendment made to section 15(3) through the Finance Bill of 2026.
Section 15(3)(b)(ii) is the second mandatory condition to be fulfilled. This involves reversal of input tax credit by the recipient. This essentially means that any amount that is claimed as ITC is excessive must be paid back. This is to be read with section 34 of the CGST Act. Section 34(1) posits that the supplier should issue a credit note to the recipient in case the recipient has paid an amount that is beyond the taxable value of the goods or services or both. The GST Council meeting held on the same date as above suggested amendment of these two sections to suitably link the two. It suggested that section 15(3)(b) should be amended in a way that allowed for providing discount through issuance of credit note. Similarly, section 34(1) that defines credit note was suggested to include a reference to section 15(3)(b). This allowed the recipient to reverse input tax credit in case of discount provided post sale. As suggested by the council, the Finance Bill of 2026 incorporated these changes.
These changes have been long overdue. The tax department when scrutinizing the assessee has from time to time raised demands with respect to the discounts offered by the suppliers post the sale of good or services or both. The requirement of agreement was read too much into the section preventing suppliers from offering discounts. Discounts throughout the year form a part of incentives that drive recipients to purchase the goods or services. Afterall, the foundation of economics is incentive. It may be social or moral or financial. Consumer behavior is affected when providers of goods and services are reluctant to incentivize them. This affects the economy of the country negatively. The linking of post-sale to discounts to agreements have been done away through the amendments. Additionally, allowing the issuance of credit notes in this regard post sale is a move in the right direction. It eases businesses where any adjustment in the taxable value can be sorted by issuance of credit note.
In my opinion, there is another benefit that is derived from these amendments. Availing of Input Tax Credit is often accompanied by a plethora of issues primarily related to mismatch in the forms or the invoices and the purchase register. This amendment requires there to be a clear linkage between the issuance of the credit note and the corresponding invoice it pertains to. The corresponding tax invoice should be mentioned in the credit note. This has a twofold benefit. The first is easier availing of ITC since invoices can be matched. The other is that the amendments prevent the misuse of credit notes in light of the reference made to the corresponding section and the necessity of mentioning the corresponding invoice the note pertains to.
Amendment to Section 54 of the CGST Act
Section 54(6) has been amended to include inverted duty structure under provisional refunds. An instruction dated 3 rd October 2025 title Instruction No. 06/2025-GST brought to the fore the suggested amendment by the GST council’s 56 th meeting . The same has been incorporated in the Finance Bill, 2026.
Section 54 broadly deals with refund of tax in various scenarios. The explanation to the section defines what the term ‘refund’ includes. It includes tax paid on zero rated supply of goods, tax paid on input or input services etc. The discussion herein will be strictly confined to clause 6 since the amendment has specifically targeted a changehere. In short, the proper officer can refund 90% of the refund claimed provisionally subject to the notifications and recommendations of the central government and the Council. After verification of the documents, the final order can be passed by the proper officer along with refund of the remaining amount.
It is pertinent to understand a key phrase termed ‘zero-rated supplies’. It is defined under section 16(1) of the Integrated GST (IGST hereinafter) Act. It includes export of goods or services or both or supply of them to Special Economic Zone (SEZ).
This section, post the recent amendment applies to inverted duty structure as well. Inverted duty structure is a scenario where the tax rate on input used is higher than the tax rate for the output sold. For example, the sale of fabric which is a finished product attracts a tax of 5% whereas the raw material which is non-woven fabric has a tax of 12% on it.This means that there will be an accumulation of ITC in the entire transaction due to the higher duty on the output. This difference in the amount arising can be henceforth claimed as refund under section 54(6).
This is a progressive amendment that tackles the problem of excess amount paid due to the Inverted Duty Structure. However, refund is a separate process that requires different forms (RFD 01A). There should be a mechanism to avail the difference amount through ITC process itself. Ultimately, in substance the amount claimed under this section is ITC. A separate process to claim refund takes a considerable amount of time and labour.
Amendment to section 13(8) of the IGST Act
Section 13 of the IGST Act provides for the determination of the place of supply of services where the location of the service provider or the recipient is outside India. Each of the clauses provides for different scenarios and the respective place of supply for that. For example, services directly related to immoveable properties such as hotels shall have the place of service as the location of the immoveable property itself.
Subsection 8 specifies three categories of supply of services where the location of the supplier shall be the place of supply of service. The three categories of services are services supplied by a banking company or financial institution or non-banking financial institution to account holders; intermediary services; hiring means of transports that excludes aircrafts and vessels. Clause (b) which is intermediary services will be omitted through the amendment by the Finance Bill, 2026.
Intermediary is defined under section 2(13) of the IGST act.It includes a broker or an agent or a person who facilitates the supply of goods or services between two or more people but requires such a person not to be the one who supplies goods or services on his account. Intermediary Services therefore includes such persons who provides such services.
The Explanatory Memorandum to the Finance Bill of 2026 suggests that this omission is to classify intermediary services under subsection (2) of the same section (section 13). This means that the place of supply for intermediary services will be the location of recipient of services unless it is not available in the ordinary course of business.
This amendment was necessary due to the awkward situation created by the clause. For example, an intermediary who is not India provides services to an Indian, the Indian is not liable to pay IGST. However, an Indian agent providing services to an outsider is required to pay IGST. The amendment ensures that the place of supply will be the location of the recipient henceforth. The differential treatment is therefore rectified, and the new amendment ensure uniformity.
Conclusion
Yearly amendments are carried out by the Union Government in pursuance of the grievances of taxpayers and practitioners. As seen above, most of the amendments have been suggested by the meetings of the GST Council and various circulars issued by the CBIC. There have of course been numerous criticisms of the continuous and large number of amendments by advocates and chartered accountants. However, it must be borne in mind that inconvenience in the short term will be compensated by a system that is ultimately robust. The amendments carried out under the Finance Bill, 2026 have a common goal of providing greater incentives to the taxpayers as shown hereinbefore. The law is constantly evolving, and suitable amendments are therefore inevitable. Rather than focusing on the quantity, the quality of amendments must be analyzed before making a judgement.
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