India will remove two requirements for post-sale discounts under the Central Goods and Services Tax (CGST) Act, 2017, from Nov. 1, making it easier for suppliers to reduce taxable value.
Notification No. 03/2026–Central Tax, dated Oct. 26, sets Nov. 1 as the commencement date for sections 153 to 155 of the Finance Act, 2026. The changes apply to the CGST Act. Section 153 replaces section 15(3)(b), which governs when post-supply discounts can be excluded from taxable value. The amended provision allows exclusion if the supplier issues a credit note and the recipient reverses the input tax credit (ITC) attributable to the discount. Section 154 adds qualifying discounts under section 15(3)(b) to section 34, which covers credit and debit notes.
Under the previous rule, discounts given after a sale had to be set out in an agreement made no later than the time of supply and linked to relevant invoices. Recipients also had to reverse the associated ITC. The amendment removes the first two conditions while retaining the supplier’s credit-note requirement and the recipient’s reversal obligation.
The GST Council recommended the change on Sept. 3, 2025. An agenda note for its 53rd meeting said the GST portal had no function to verify recipients’ ITC reversals, and tax officers also had difficulty checking them. Council documents did not quantify expected savings or the number of businesses affected.
Mint reported that Rahul Shekhar, a partner for indirect tax at Nangia Global, identified companies in fast-moving consumer goods, pharmaceuticals, retail and consumer durables as potential beneficiaries because they use dealer incentives and volume-based discounts. Shekhar said businesses could incur added costs when they could not document discount terms under the former rule.
The amended provisions of the Central Act take effect Nov. 1.
