From 1 November 2026, a discount given after a sale no longer needs to be agreed before the sale to come off the GST value. CBIC Notification No. 03/2026-Central Tax, dated 26 October 2026, brings sections 153 to 155 of the Finance Act, 2026 into force on that date.
What changed
- Section 15(3)(b) of the CGST Act. A post-sale discount is excluded from the value of supply if the supplier issues a credit note and the buyer reverses the input tax credit on it. The old conditions are gone: an agreement made at or before the time of supply, and a link to specific invoices.
- Section 34. A credit note can now be issued expressly for such a discount.
What to do
- Suppliers: issue a GST credit note for year-end, volume and target discounts. A financial credit note without GST does not reduce your tax.
- Buyers: reverse the input tax credit shown on the credit notes you receive.
- The section 34(2) time limit is unchanged: declare a credit note by 30 November after the end of the financial year of the supply, or by the annual return date if earlier.
- Supplies made before 1 November 2026, including all FY 2025-26 sales, may still need the old conditions. Check them with your adviser. Credit notes for FY 2025-26 supplies must be declared by 30 November 2026.
- For the SGST share, each State must amend its own GST Act.
Our input tax credit guide explains how reversals work.
Sources: Notification 03/2026-Central Tax (Gazette of India), Taxguru.
