The Goods and Services Tax framework is evolving again. Following the 57th GST Council meeting in October 2026, a new wave of reforms took effect from November 1, shifting the landscape for Indian businesses. Here’s what’s changed.
Expanded Refund Eligibility and Faster Processing
One of the most significant
changes is the enhancement of the refund mechanism, designed to improve working capital for businesses. Starting November 1, 2026, companies can claim refunds on Input Tax Credit (ITC) accumulated on input services under the inverted duty structure. Previously, this was largely restricted to input goods. Furthermore, the government has moved to automate and expedite the refund process. A risk-based system is expected to sanction 90% of provisional refunds for eligible claims within just three working days of acknowledgement, a significant improvement from previous timelines. The timeline for issuing an acknowledgement or a deficiency memo has also been shortened from 15 days to 10. These measures collectively aim to reduce the time that business funds are locked in the tax system.
Simplified Registration for E-commerce Sellers
Small businesses operating through e-commerce platforms have received a major compliance reprieve. Previously, sellers needed a physical presence and separate GST registration in every state where their goods were stored. Under the new rules, eligible small sellers can now use the warehouse of an e-commerce operator as their principal place of business for GST registration in states where they lack a physical office. This change is expected to benefit approximately 9.5 lakh small sellers, allowing them to expand their market reach across India without the heavy administrative and cost burden of setting up multiple state-wise establishments. The documentation for GST registration has also been standardised to make the online application process smoother and reduce delays.
More Flexibility in Post-Supply Discounts
The latest revisions address a long-standing issue regarding the tax treatment of discounts offered after a sale has been completed. Previously, to exclude a discount from the taxable value, it had to be linked to a specific invoice and established via a pre-supply agreement. Effective November 1, 2026, this requirement for a pre-existing agreement has been removed. Businesses can now issue credit notes for post-sale discounts, such as volume-based rebates or yearnd incentives, provided the customer reverses the corresponding ITC. This aligns the GST framework more closely with common commercial practices and reduces potential tax costs for businesses offering such discounts to drive sales.
Changes to E_Invoicing and Return Filing
While major return filing overhauls are still under consultation, the government's direction is toward greater automation and accuracy. The e_invoicing mandate continues for businesses with an aggregate annual turnover exceeding ₹5 crore. However, the 57th GST Council meeting also initiated a process to simplify return forms like GSTR_1 and the Invoice Furnishing Facility (IFF). Drafts of these revised forms were opened for public consultation on November 1, 2026, with the goal of reducing mismatches between a company's declared liabilities and the ITC claimed by its customers. This aims to cut down on the number of automated notices and reconciliation issues that currently plague the system.
Future Reforms on the Horizon
Not all approved changes are immediate. A second phase of reforms, which requires legislative amendments to the GST law, is targeted for implementation on April 1, 2027. These are more structural in nature and include significant proposals like removing the power of arrest for GST officers, raising the threshold for launching criminal prosecution from ₹1 crore to ₹5 crore, and setting a minimum notice threshold of ₹10,000. Another key future change involves expanding refund eligibility to include ITC on capital goods for both zero rated supplies and under the inverted duty structure, though this will be apportioned over 60 months and is also slated for April 2027.
