Budget Alert 2026: Major Ease of Doing Business in GST Valuation
The Finance Bill, 2026 has proposed a landmark shift in how Post-Supply Discounts are treated under GST. This change simplifies one of the most litigative areas of the CGST Act, aligning tax laws with modern commercial realities.
The Big Change: Section 15(3)(b) & Section 34
Previously, for a post-sale discount to reduce your GST liability, you had to prove it was established via a pre-existing agreement and linked to specific invoices. The 2026 amendment removes these rigid hurdles.
What is Changing?
• Removal of the “Agreement” Mandate: You no longer need to prove that the discount was “agreed at or before the time of supply.”
• No Invoice-by-Invoice Linking: The requirement to specifically link every discount to a particular original invoice is being done away with.
• Mandatory Credit Note Route: To exclude the discount from the “Value of Supply,” you must now issue a GST Credit Note under Section 34.
• ITC Reversal is Key: The discount benefit is strictly contingent on the recipient reversing the proportionate Input Tax Credit (ITC).
This is a huge relief for industries like FMCG, Pharma, and Consumer Durables, where volume-based incentives and “schemes” are often launched mid-year without being part of the initial contract.
