GST Changes from 1 November 2026: Discounts, Scrap RCM, TDS
October 28, 2026 · GST
GST changes from 1 November 2026: credit notes for post-sale discounts, RCM and TDS on more scrap, faster refunds and e-commerce warehouse registration.
The GST changes from 1 November 2026 are now notified. Notification No. 03/2026-Central Tax brings sections 153 to 155 of the Finance Act, 2026 into force on November 1, 2026, amending sections 15, 34 and 54 of the CGST Act. Companion notifications dated October 26 and 27, 2026 extend reverse charge and GST TDS to more kinds of scrap, change refund procedure and allow registration through an e-commerce warehouse.
For jewellery and diamond wholesalers, the timing matters most. From November 1, 2026, year end target and volume discounts given after the sale can reduce the taxable value through a credit note under section 34, without an agreement entered into at or before the sale, once the buyer reverses the matching input tax credit.
Before and after: GST changes from 1 November 2026 at a glance
Area
Before November 1, 2026
From November 1, 2026
Basis
Post-sale discount, section 15(3)(b)
Prior agreement linked to specific invoices needed
Credit note plus buyer's credit reversal, as per section 34
Finance Act, 2026, s.153; Notification 03/2026-CT
Credit note, section 34(1)
Excess value or tax, returns, deficient supply
Also issued for a section 15(3)(b) discount
Finance Act, 2026, s.154
Reverse charge on scrap
Metal scrap from unregistered suppliers
Plus used cooking oil, plastic, tyre and e-waste scrap from unregistered suppliers
Notification 04/2026-CT(Rate)
GST TDS on scrap
Metal scrap only
Plus the same four categories
Notification 07/2026-CT
Provisional refund, section 54(6)
90% provisional refund for zero-rated supplies
Also for inverted duty structure refunds
Finance Act, 2026, s.155
INR 1,000/- minimum refund, section 54(14)
Applied to all refunds
Not for goods exported with payment of tax
Finance Act, 2026, s.155
Post-sale discount GST credit note: what changes in section 15(3)(b)
Under the old clause, a post-sale discount reduced value only if it was established in an agreement entered into at or before the time of supply and specifically linked to relevant invoices. Year-end target discounts often failed this test, because the terms were fixed later or not tied to particular invoices.
The new clause asks for two things only. The supplier must issue a credit note for the discount, and the recipient must reverse the input tax credit attributable to it, both in accordance with section 34. The prior agreement and invoice-linking words are gone.
Section 34 time limit and the reversal condition
The credit note must be declared in a return by November 30 after the end of the financial year of supply, or the annual return date, if earlier. The proviso to section 34(2), in its current form since October 1, 2025, says the supplier's output tax is not reduced if the recipient has not reversed the matching credit. The buyer's action therefore controls the supplier's tax saving.
Myth vs fact: year-end discounts
Myth: From November 1, every year-end discount automatically reduces GST. Fact: It reduces value only when a GST credit note is issued and the buyer reverses the matching credit.
Myth: A signed scheme letter before the sale is still essential. Fact: The new section 15(3)(b) no longer refers to a prior agreement or invoice linking, though written terms remain useful evidence.
Myth: A credit note can be issued any time. Fact: The section 34(2) time limit still applies.
Hypothetical example: a diamond wholesaler grants a jewellery retailer a 2% volume discount in March 2027 on purchases made between November 1, 2026 and March 31, 2027. It can issue a GST credit note, declare it within the section 34(2) time limit, and reduce output tax once the retailer reverses the credit. Neither section 153 of the Finance Act, 2026 nor Notification 03/2026-CT contains a transition provision, and as of October 28, 2026 CBIC has issued no circular on discounts relating to supplies made before November 1, 2026. Businesses should take professional advice before applying the new clause to such discounts.
RCM on scrap and GST TDS on metal scrap: four new categories
Notification 04/2026-Central Tax (Rate) adds four items to the reverse charge list from November 1, 2026. Where an unregistered person supplies them to a registered person, the recipient pays the tax. The IGST counterpart is Notification 04/2026-Integrated Tax (Rate).
Item
Heading
RCM from unregistered supplier
GST TDS between registered persons
Used cooking oil
1518
From November 1, 2026
From November 1, 2026
Waste and scrap of plastics
3915
From November 1, 2026
From November 1, 2026
Waste and scrap of tyres
4004
From November 1, 2026
From November 1, 2026
Metal scrap
Chapters 72 to 81
Since October 10, 2024
Since October 10, 2024
Electrical and electronic waste and scrap
8549
From November 1, 2026
From November 1, 2026
How GST TDS on scrap works
Notification 07/2026-Central Tax substitutes clause (d) of Notification 50/2018-Central Tax. A registered person receiving any of the five categories from another registered person must deduct tax under section 51. The rate is one per cent CGST plus one per cent SGST or UTGST, 2% in total, where the total value of supply under a contract exceeds INR 2,50,000/-, excluding tax, and the amount is deposited within ten days after the end of the month.
For inter-State supplies, section 20 of the IGST Act applies section 51 and fixes the deduction at 2% IGST. Under the proviso to section 51(1), no tax is deducted where the location of the supplier and the place of supply are in a State or Union territory other than the recipient's State or Union territory of registration.
Gold and silver scrap fall under heading 7112 in Chapter 71, outside Chapters 72 to 81. On a plain reading, as of October 28, 2026, these entries do not cover them.
Registration exemption withdrawn for scrap suppliers
Notification 06/2026-Central Tax amends Notification 5/2017-Central Tax, issued under section 23(2). From November 1, 2026, that exemption does not apply to persons supplying any of the five categories. Earlier, only metal scrap was excluded.
Refund changes from November 1, 2026
Inverted duty refunds now qualify for the 90% provisional refund under section 54(6). The CGST (Amendment) Rules, 2026 also change procedure: an application not acknowledged or returned within ten days is deemed acknowledged (rule 90). The portal then generates the provisional order in FORM GST RFD-04 within three working days on a risk basis (rule 91).
The new rule 89(5) inverted duty formula counts input services on which credit is availed on or after November 1, 2026. From April 1, 2027, credit on capital goods availed on or after that date is also counted, spread over 60 months.
E-commerce warehouse registration under rule 14B
New rule 14B lets a person registered in one State take registration in another State or Union territory without a physical presence there. The principal place of business is declared as the warehouse of an e-commerce operator that must collect tax under section 52.
The conditions are that the person intends to supply goods through such an operator, that the total output tax on those supplies to registered persons (other than persons registered on the same PAN) does not exceed INR 2,50,000/- per month, and that the operator consents to the warehouse being declared. The operator has seven working days to consent, failing which the application is not processed further.
The REG-01 application quotes the home State GSTIN. Unless already completed, biometric Aadhaar authentication, document verification and physical verification of the home State principal place of business are required; if physical verification is not done within 30 days, the application is deemed approved. Rule 14A users must first withdraw through FORM GST REG-32.
Timeline: notifications and effective dates
Date
Event
April 1, 2026
Section 101A amendment (Finance Act, 2026, s.156) in force; not part of the Nov