GST Amendments Under Finance Bill 2026: Post-Sale Discounts, Refund Rules and Intermediary Services

The Finance Bill, 2026, introduced alongside the Union Budget, contains several targeted amendments to the Goods and Services Tax laws that will take effect from April 1, 2026. Three changes stand out for their practical significance: the removal of the pre-existing agreement requirement for post-sale discounts under Sections 15 and 34 of the CGST Act, the elimination of the minimum threshold for export refund claims, and the deletion of the special place-of-supply rule for intermediary services under Section 13(8)(b) of the IGST Act. Each of these addresses a specific pain point that had generated sustained litigation and compliance difficulty for businesses.

Post-Sale Discounts: Amendment to Sections 15 and 34

Under the pre-amendment framework, a supplier could reduce the value of supply and issue a credit note for a post-sale discount only if the discount was established in terms of an agreement entered into at or before the time of supply, and the discount was specifically linked to the relevant invoices. This requirement created practical difficulties for businesses that offered performance-linked discounts, year-end rebates, or volume incentives that were structured after the supply had already occurred. The Finance Bill 2026 removes the pre-existing agreement requirement. From April 1, 2026, post-sale discounts can be reflected in credit notes without the need to demonstrate a prior agreement, provided the other conditions for credit notes are satisfied.

Export Refunds: Removal of Minimum Threshold

The Finance Bill 2026 amends Section 54(14) of the CGST Act to remove the minimum threshold that previously applied to the sanctioning of refund claims for exports made with payment of GST. Under the old provision, refund claims below a specified threshold were not sanctioned, which created difficulties for small exporters with low individual transaction values. The removal of this threshold means that all export refund claims, regardless of value, are now eligible for processing. This is a meaningful relief measure for MSMEs and small exporters who had previously been effectively excluded from refund claims due to the transaction-size threshold.

Intermediary Services: Deletion of Section 13(8)(b)

The deletion of clause (b) of sub-section (8) of Section 13 of the IGST Act is the most legally significant of the three changes. This provision had prescribed a special place-of-supply rule for intermediary services: the place of supply was deemed to be the location of the supplier, which meant that Indian intermediaries providing services to foreign clients were treated as making an intra-India supply and were therefore liable to GST, rather than being treated as zero-rated exports. This had been challenged in multiple High Courts and the Gujarat High Court had struck down the provision as unconstitutional. The Finance Bill 2026 now removes it legislatively, effectively making genuine intermediary services to foreign clients eligible for zero-rating as exports.

What Businesses Should Do Now

Businesses that regularly issue post-sale credit notes should review their credit note procedures and update their documentation practices, since the pre-existing agreement requirement will no longer apply from April 1. Exporters should review pending refund claims that may have been held up due to the minimum threshold and initiate fresh claims for amounts previously below the cut-off. Indian intermediaries providing services to foreign principals should immediately re-evaluate their GST classification and consider whether their supplies now qualify as zero-rated exports, which could generate significant input tax credit refund opportunities. Legal and tax teams should map the specific contract structures against the amended provisions to confirm eligibility.