GST AMENDMENTS AND ITS IMPACT – UNION BUDGET 2026

GST AMENDMENTS AND ITS IMPACT – UNION BUDGET 2026

Introduction

The Union Budget 2026 comes up with the major amendments in the Goods and Services Tax (GST) through the Finance Bill, 2026. Earlier budgets were focused on revision of GST rates but this budget mainly focus on simplifying compliance, reducing litigation, and improving refund mechanisms for businesses.

Aim of these amendments were to improve the ease of doing business and strengthen the export mechanism in India.

Key GST Amendments in Budget 2026

1. Clarification on Post-Supply Discounts (Section 34 & Section 15 of the CGST Act)

Earlier, if the discount was agreed before or at the time of supply then only supplier can reduce the taxable value through a credit note.

But after amendment in Budget 2026 it is clearly stated that even if discount was not pre agreed in the contract, credit notes can be issued for post-supply discounts subject to following conditions: 

• The recipient must reverse proportionate Input Tax Credit (ITC).
• The discount should be properly documented.

Impact of this amendment:

• Provides flexibility to those businesses which offers sales discounts.
• Reduces disputes related to valuation under GST

2. Modification in GST Refund System

(A) Provisional Refund in case of Inverted Duty Structure (Section 54(6) of CGST Act):

Earlier, only in case of exports ( zero-rated supplies ) the 90% provisional refund was allowed and  refund arising from Inverted Duty Structure (IDS) did not get this benefit.

But After amendment in Budget 2026, refund arising from IDS can now receive up to 90% provisional refund, similar to export refunds.

Impact of this amendment :

• Those sectors whose input tax rate is more than output tax rate got major relief
• The refund processes got faster
• This will help in improving working capital for manufacturer

(B) Removal of Minimum Threshold for Export Refunds (Section 54(14) of CGST Act):

Earlier, if the refund amount is less than ₹1,000 (in most refund cases including exports) then No refund shall be granted.

Amendment in Budget 2026 provides an exception that when the refund is claimed for export of goods with payment of IGSTthen the limit ₹1,000 will not apply.

           Impact of this amendment :

• small export refunds can be claimed
• Relief to MSMEs and small exporters
• It helps exporters in small consignments

3. Changes in Advance Ruling Mechanism (insertion of Section 101A(1A)

Earlier, if on the same issue different states give conflicting advance rulings then parties should appeal to the National Appellate Authority for Advance Ruling (NAAAR) to resolve conflicting advance rulings issued by different State.

Practicallythis authority had not been constituted, and because of which Businesses had to approach High Courts and many cases remained unresolved.

Amendment in Budget 2026 inserts a new sub-section (1A) in Section 101A which states that the Central Government, on recommendation of the GST Council, may Authorize any existing authority or tribunal to hear appeals against conflicting advance rulings until the National Appellate Authority is formally constituted.

The term “existing authority” includes tribunals such as GSTAT.

Impact of this amendment:

• It reduces litigation operating in multiple states
• Provides uniform interpretation of GST law
• Provides a quick legal clarity on GST matters

4. Removal of Intermediary Services Dispute (Section 13(8)(b) IGST Act)

Earlier under Section 13(8)(b) the place of supply shall be the location of the supplier for  intermediary services .

In case the recipient is in foreign country and the supplier is in India then as per this the Place of Supply is India so the service did not qualify as export and GST was payable.

 Amendment in Budget 2026 omit/ delete clause (b) of Section 13(8)

Due to this the general rule under Section 13(2) will apply which means Place of supply shall be the location of the recipient of services.

Impact of this amendment:

• Export of intermediary services now treated as Export of Services (Zero-rated)
• Reduces disputes in cross-border service transactions

Objectives of GST Amendments in Budget 2026

1.  The objective of this amendment is to improve the refund process under GST by making Faster and Efficient Refund Mechanism
2. To address the issue of Litigation and Tax Disputes.
3. It aims to simplify complex GST provisions and remove procedural difficulties faced by taxpayers.
4. Strengthening Ease of Doing Business, this amendment make it easier for businesses to operate without unnecessary tax complications.
5. To make a major change in place-of-supply rule for intermediary services which Encourages Export.

Conclusion

The Union Budget 2026 takes a progressive step toward creating efficient and business friendly GST system by introducing this amendment.

It reflect the government’s effort to strengthen the Goods and Services Tax (GST) regime. This will help in ensuring greater transparency in GST administration. By addressing practical challenges faced by taxpayers these reforms helps in improving ease of doing business. The Union Budget 2026aim to shift the focus fromchanges in rates to structural improvements in tax.