The upcoming Finance Bill is expected to propose at least five significant amendments to GST laws, based on recommendations of the GST Council, with the objective of easing compliance, improving cash flows and reducing long-pending litigation.
1) One of the most important proposed changes relates to post-sale discounts under GST. The GST Council has recommended amendments to sections 15 and 34 of the CGST Act, 2017, removing the mandatory requirement that discounts must be pre-agreed before or at the time of supply and linked invoice-wise. This relaxation is expected to resolve long-standing practical issues faced by businesses, particularly in distributor–retailer models, where commercial discounts are often finalised after sales.
2) Another major amendment concerns intermediary services under the IGST Act. The Council has proposed the omission of section 13(8)(b) of the IGST Act, 2017, which currently deems the place of supply for intermediary services as the location of the supplier. Once amended, the place of supply will be determined under the default rule in section 13(2), i.e., the location of the recipient of services. This change will enable Indian exporters of intermediary services to qualify as exporters and claim GST export benefits, potentially resolving litigation estimated at around Rs 3,300 crore. However, Indian taxpayers availing intermediary services from overseas suppliers may now face GST liability under the reverse charge mechanism (RCM).
3) The Finance Bill is also expected to address refund issues for low-value export consignments. The GST Council has recommended the removal of the Rs 1,000 minimum threshold for claiming refunds on exports made with payment of tax, by amending Section 54(14) of the CGST Act. This move will particularly benefit small exporters using courier or postal modes, who currently face refund denials due to the threshold limit.
4) Another proposal relates to risk-based provisional refunds in cases of inverted duty structure (IDS). Amendments to Section 54(6) of the CGST Act are expected to allow 90% provisional refund of IDS claims, similar to the mechanism already available for zero-rated supplies. While the CBIC has operationalised this facility through instructions from November 1, the proposed amendment will provide statutory backing to the scheme.
5) The fifth key amendment seeks to expand the scope of inverted duty structure refunds by including input services and capital goods, which are currently excluded. Following GST rate rationalisation, several products have moved to the 5 per cent slab, leading to the accumulation of input tax credit due to high procurement of services and capital goods. The proposed change is expected to ease working capital pressures for affected industries.
Tax experts note that the upcoming Budget is likely to prioritise ease of doing business, compliance simplification and dispute resolution under GST and Customs laws. Industry is also hopeful for a Customs amnesty scheme to settle long-pending disputes, alongside GST reforms aimed at rationalising place of supply rules, streamlining refunds and easing restrictions on input tax credit.
If implemented, these GST amendments could significantly improve liquidity for businesses, reduce litigation exposure and create a more predictable and business-friendly tax environment.
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