GST Changes from 1st Nov 2026: New Rules for Post-Supply Discounts

Introduction

The Central Government, through Notification No. 03/2026–Central Tax dated 26th October 2026, has brought Section 153 of the Finance Act, 2026 into effect from 1st November 2026. This amendment brings an important change to Section 15(3)(b) of the CGST Act, 2017, which deals with the deduction of post-supply discounts from the taxable value of goods or services. The amendment is expected to provide relief to manufacturers, traders, distributors and other businesses granting discounts after the supply of goods or services.

1. What Was the Earlier Provision?

Under the earlier provisions of Section 15(3)(b) of the CGST Act, businesses could reduce the taxable value by claiming post-supply discounts only when certain conditions were satisfied.

The following conditions were required:

1. The discount must be established in terms of an agreement entered into at or before the time of supply.
2. The discount must be specifically linked to relevant invoices.
3. The recipient must reverse the ITC attributable to the discount.

Because of these conditions, businesses faced difficulties while providing year-end discounts, turnover-based incentives and other commercial benefits.

2. What Is the New Amendment?

Section 153 of the Finance Act, 2026 amends Section 15(3)(b) of the CGST Act.

With effect from 1st November 2026, the requirements relating to the following have been removed:

• An agreement entered into before or at the time of supply.
• Linking the discount to specific invoices.

This gives businesses greater flexibility in providing discounts after the supply.

However, the following conditions must still be satisfied:

• The supplier must issue a GST credit note.
• The recipient must reverse the ITC attributable to the discount.
• The applicable requirements of Section 34 must be followed.

Conclusion

Section 153 of the Finance Act, 2026 introduces an important relaxation in the treatment of post-supply discounts under GST.

The removal of the prior agreement and invoice-wise linkage requirements provides businesses with greater flexibility while granting commercial discounts.

However, businesses must ensure that the recipient reverses the corresponding ITC and that the supplier follows the applicable credit note requirements under Section 34 of the CGST Act.

• Effective Date: 1st November 2026.
• Legal Reference: Section 153 of the Finance Act, 2026 read with Section 15(3)(b) of the CGST Act, 2017.

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