Budget 2026-27: Amendment to S. 34 of CGST Act Clarifies Validity of Credit Notes for Post-Sale Discounts [Read Finance Bill 2026]

Section 34 of the Central Goods and Services Tax (CGST) Act, 2017 deals with the issuance of credit notes and debit note by the suppliers. Under this section, a supplier may issue a credit note when the taxable value or tax charged exceeds the taxable value/tax payable for the supply, where the goods returned by the recipient to supplier, or where the goods or service found to be deficient.

The Finance Bill, 2026 has amended section 34(1) of the CGST Act, by inserting the words “or where a discount referred to in clause (b) of sub-section (3) of section 15 is given.”

The section 15(3)(b) provides that the value of supply shall not include any discount given after the supply has been effected, provided that such discount is established in terms of an agreement entered into at or before the time of such supply, is specifically linked to relevant invoices, and the input tax credit attributable to the discount has been reversed by the recipient of the supply.

The amendment was made to section 34 of CGST Act, clarifies the validity of credit notes provided by the supplier for Post-Sales discounts under section 15(3)(b) of the act.

This removes the ambiguity and provides statutory clarity regarding the validity of Credit notes issued for the post-sale discounts. This amendment ensures smoother compliance under the CGST

This amendment comes to effect with the enactment of the Finance Bill, 2026.

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