GST New Rules From November 1, Here's How Discounts, Input Tax Credit & Refunds Will Change?

New Delhi: The government has issued a notification introducing changes to the Goods and Services Tax (GST) framework from November 1, 2026. The revised provisions are expected to affect businesses, particularly those operating in the fast-moving consumer goods (FMCG) and retail sectors.

The changes cover GST adjustments on post-supply discounts, reversal of input tax credit (ITC), refunds and the appellate mechanism.

What Has The Government Announced?

The government has notified amendments relating to credit notes under the Central Goods and Services Tax (CGST) Act.

The provisions will come into effect on November 1, following recommendations made in last year's Union Budget and a GST Council meeting held in September.

The changes aim to clarify tax treatment, improve compliance and simplify procedures for businesses.

How Will Discounts Affect GST?

One of the key changes concerns discounts offered by suppliers after goods or services have already been supplied.

Under the revised provisions, businesses will be able to adjust their GST liability against eligible post-supply discounts through credit notes.

This means suppliers can reduce the taxable value of a transaction when qualifying discounts are provided after the original sale, subject to applicable conditions.

The change is particularly relevant for FMCG companies and retailers, where promotional discounts and price adjustments are common.

What Changes For Input Tax Credit?

The revised rules also address the treatment of input tax credit when suppliers issue GST credit notes.

If a supplier issues a credit note reducing the GST charged on a transaction, the buyer must reverse the corresponding ITC already claimed.

In simple terms, buyers cannot retain the full tax credit when the supplier reduces the GST liability through a credit note.

This provision is intended to ensure consistency between the tax liability reported by suppliers and the credit claimed by buyers.

What About GST Refunds?

The government has also clarified provisions relating to refunds of unutilised input tax credit.

These changes are intended to provide greater clarity on refund eligibility and the applicable procedures.

Additionally, amendments concerning refund rules and the GST appellate mechanism are scheduled to take effect from November 1.

What Should Businesses Know?

Businesses should review their credit note procedures, discount arrangements and ITC reconciliation practices before the implementation date.

The changes could be particularly important for FMCG distributors, wholesalers and retailers handling frequent post-sale discounts and adjustments.