Updated 2 November 2026. This is a plain-language summary for business owners, not legal or tax advice. Confirm details on the CBIC GST site and with your CA before changing your process.
Short answer: from 1 November 2026 a set of GST amendments came into force. The biggest practical change is that a discount given after the sale can now reduce GST if the supplier issues a GST credit note and the buyer reverses the matching input tax credit (ITC). Refunds for inverted duty get a 90% provisional route, small export refunds below ₹1,000 are allowed, and several registration and cancellation rules were rewritten. If you use billing or ERP software, your credit-note and discount flow is the first thing to check.
Which notifications bring these changes
According to reports by Taxonation and CAclubindia, three Central Tax notifications were issued on 26 October 2026:
- Notification 03/2026-Central Tax brings into force, from 1 November 2026, the Finance Act 2026 amendments to sections 15, 34 and 54 of the CGST Act (valuation, credit notes and refunds).
- Notification 04/2026-Central Tax widens e-invoicing from 1 January 2027. We cover it separately in our guide to e-invoicing for reverse charge and import of services.
- Notification 05/2026-Central Tax amends the CGST Rules. Most changes apply from 1 November 2026, while some start on 1 December 2026, 1 January 2027 or 1 April 2027.
1. Post-sale discounts can now reduce GST
Earlier, a discount given after the supply reduced the taxable value only if it was agreed before or at the time of supply and could be linked to specific invoices. Many trade schemes, such as year-end volume rebates or dealer targets, failed this test, so suppliers often issued "commercial" credit notes without any GST effect.
After the amendment to section 15, a post-supply discount is excluded from the taxable value when two things happen: the supplier issues a GST credit note under section 34, and the recipient reverses the related ITC. The old requirement of a prior agreement linked to specific invoices has been dropped, as reported by Taxonation.
What to do
- List the discount and rebate schemes you run and decide which will be settled through GST credit notes.
- Tell your dealers or buyers in writing that they must reverse the matching ITC. Without this, the supplier's reduction is at risk.
- Keep the scheme circular, target sheet and calculation on file for each credit note.
- Track the section 34 time limit for declaring credit notes in your returns. Your CA can confirm the exact date that applies to you.
2. Faster refunds for inverted duty
Businesses whose input tax rate is higher than their output tax rate (an inverted duty structure) often wait months for refunds of unused ITC. The amended section 54(6) extends the 90% provisional refund, which was earlier limited to zero-rated supplies such as exports, to these inverted duty refunds as well. Reports also say the refund formula in Rule 89(5) has been substituted, with input services counted in net ITC from 1 November 2026.
Two cautions: the provisional refund is subject to risk checks, and Kanakkupillai notes that it applies to new claims, not to claims already pending. Keep following up on old claims separately.
3. Small export refunds below ₹1,000
Section 54(14) earlier blocked refunds under ₹1,000. That floor no longer applies to tax paid on goods exported with payment of tax. This mainly helps small exporters who ship by courier or post and used to leave small amounts unclaimed. The ₹1,000 floor continues for other refund types.
4. Registration, amendment and cancellation rules
Notification 05/2026 rewrites several registration rules. As reported by CAclubindia:
- New Rule 14B: a supplier selling through an e-commerce operator that collects TCS may register in a state where it has no physical premises, using the operator's warehouse as the principal place of business. Conditions include a cap of ₹2.5 lakh of monthly output tax on supplies to registered persons and the operator's consent. Check on the GST portal whether the facility is live before you plan around it.
- Amendments (Rule 19): changes in registration details are generally to be applied for within 15 days, with scrutiny when the principal place of business changes. One part applies from 1 December 2026.
- Voluntary cancellation (Rule 20): the application is generally due within 30 days of the event and must include stock, capital goods and liabilities. Pending returns and dues must be cleared.
- Suspension for non-filing (from 1 April 2027): new provisions deal with suspension and cancellation when returns are not filed for long periods or bank account details are not furnished.
Billing software checklist after 1 November
Most of these changes land in your billing, accounting or ERP software, not just in the return. Ask your software provider, or your developer if you use a custom system, to confirm each point.
| Area | What your software should do |
|---|---|
| Discount credit notes | Create a GST credit note for a post-sale discount without forcing a link to one original invoice, and tag the scheme it belongs to |
| Buyer ITC reversal | Print a clear note on the credit note and, ideally, send the buyer a confirmation request |
| Commercial vs GST credit notes | Keep the two types separate so that commercial notes do not reduce output tax by mistake |
| Returns data | Export credit notes correctly into GSTR-1 data, with dates checked against the time limit |
| Refund working | Report ITC on inputs and input services separately, which makes inverted duty refund working easier |
| Audit trail | Log who created, edited or cancelled each credit note |
If you are comparing systems, our GST billing software checklist covers the basics, and Tally vs custom billing software explains when a custom build is worth it.
What is not in force yet
Several items discussed in the news are scheduled for later dates or still pending. E-invoicing for reverse charge and import of services starts on 1 January 2027, and the suspension rules start on 1 April 2027. Do not change your process for proposals that have not been notified; wait for the official notification.
Next step
We build and update custom billing and accounting software and ERP systems for Indian businesses, including GST credit notes, e-invoicing and audit trails. If your current system cannot handle the new discount rules, book a free call and we will tell you honestly what needs to change.