In a significant move aimed at improving ease of doing business and reducing long-standing tax disputes, the Union Government is likely to introduce at least five major amendments to the Goods and Services Tax (GST) framework through the forthcoming Finance Bill. These proposed changes are based on recommendations of the GST Council and are intended to simplify compliance, address interpretational issues, and provide targeted relief to exporters and businesses operating under complex supply chains.
Post-Sale Discounts to Get Statutory Backing
One of the most consequential proposals relates to post-sale discounts under the Central GST Act, 2017. Currently, businesses are required to establish that discounts were agreed upon before or at the time of supply and are specifically linked to relevant invoices. This has been a major pain point, particularly for businesses operating on distributor-led retail models. The proposed amendment seeks to remove the mandatory requirement of a pre-existing agreement, thereby allowing post-sale discounts to be recognised more flexibly. This change is expected to substantially reduce disputes and litigation around valuation and input tax credit reversals.
Place of Supply Rules for Intermediary Services to Change
Another key reform pertains to the place of supply provisions for intermediary services under the Integrated GST (IGST) Act. The GST Council has recommended the omission of clause (b) of Section 13(8), which currently deems the place of supply of intermediary services as the location of the supplier. Once amended, the place of supply will be determined under the default rule—i.e., the location of the recipient of services. This change is particularly beneficial for Indian service exporters, as it would allow such supplies to qualify as exports, making them zero-rated and eligible for refunds.
Refunds for Low-Value Export Consignments
To support small exporters and cross-border e-commerce, the proposed amendments include provisions to allow GST refunds on low-value export consignments. At present, exports made with payment of tax below a specified threshold face procedural hurdles in claiming refunds. The removal of the ₹1,000 minimum threshold is expected to benefit exporters using courier and postal channels, thereby encouraging MSME participation in international trade.
Risk-Based Provisional Refunds Under Inverted Duty Structure
The government is also planning to introduce a risk-based system for provisional refunds arising from the inverted duty structure (IDS). Under this framework, refunds may be sanctioned on a provisional basis—up to 90% of the claim—subject to risk assessment parameters. This reform aims to improve liquidity for businesses while ensuring safeguards against fraudulent claims.
Expansion of Inverted Duty Structure Refunds
Perhaps the most awaited change is in respect to extending of IDS refunds to include input services and capital goods. Currently, refunds are restricted largely to input goods, resulting in significant accumulation of unutilised input tax credit for many industries. By expanding the scope, the amendment seeks to address structural inefficiencies in the GST regime and provide comprehensive relief to manufacturing and service sectors alike.
CBIC Instructions to Bridge the Interim Gap
Pending formal legislative amendments, the Central Board of Indirect Taxes and Customs (CBIC) has already been issuing instructions to operationalise certain relief measures, including provisional refunds. However, statutory backing through amendments to the CGST and IGST Acts is expected to provide long-term certainty and uniformity.
Industry Optimistic About Reduced Litigation
Tax experts and industry stakeholders view these proposed amendments as a step towards rationalising GST law, easing compliance burdens, and reducing prolonged disputes. With GST litigation estimated to run into thousands of crores, the reforms are expected to improve cash flows, enhance predictability, and foster a more business-friendly tax environment.
If implemented in the Budget 2026, these changes could mark one of the most comprehensive rounds of GST reform since the tax’s introduction, reinforcing the government’s commitment to simplifying indirect taxation in India.
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