GST from 1 November 2026: easier post-sale discounts, tighter hotel ITC, EV rates and new exemptions — what changes for you

What has changed

Four GST notifications from the Central Board of Indirect Taxes and Customs (CBIC) change the tax picture for a wide swathe of Indian businesses — and three of them bite in days, on 1 November 2026. Post-sale discounts become far easier to defend, hotel and restaurant input tax credit is tightened to same-line credit only, electrically operated vehicles get their own GST rates, and a clutch of new exemptions arrives. A fourth notification, on e-invoicing, follows two months later, on 1 January 2027.

In plain business-owner language: if you give dealer incentives or volume discounts, run a hotel or restaurant, operate an EV fleet, move goods by road, sell through an e-commerce platform, or import services, something in this package probably touches your next return. The sections below take each notification in turn, show the old position against the new one, and end with a checklist of what to do before the dates arrive.

At a glance

One naming trap to clear up first: notification numbers 06 and 07 also exist in the Central Tax (non-Rate) series, covering the scrap package published separately. Those non-Rate instruments are not covered here. This article covers the non-Rate 03 and 04 of 2026 and the Rate-series 06 and 07 of 2026 dated 27 October 2026. Also note that the official portal copies of all four notifications leave their Gazette numbers blank, so this article cites notification numbers, dates and file numbers rather than G.S.R. or S.O. numbers.

1. Post-sale discounts, credit notes and refunds — Notification 03/2026–Central Tax

Notification 03/2026–Central Tax, dated 26 October 2026 and signed by Kriti Pandey, Under Secretary, does one thing: it appoints 1 November 2026 as the date on which sections 153 to 155 of the Finance Act, 2026 (4 of 2026) come into force. Those three sections amend sections 15, 34 and 54 of the CGST Act, 2017. The notification itself is a single page — the substance sits in the Finance Act amendments it brings into force.

Post-sale discounts: the prior-agreement test goes

Section 153 substitutes clause (b) of section 15(3) of the CGST Act. Under the old rule, a discount given after the supply could be excluded from the taxable value only if three conditions were met: the discount was established under an agreement entered into at or before the time of supply, it was specifically linked to the relevant invoices, and the recipient had reversed the input tax credit attributable to the discount. In practice, the first two conditions were the problem — year-end, volume and performance-linked incentives are often not tied to specific invoices when they are earned, and the absence of a pre-existing agreement could turn a genuine commercial discount into an added tax cost.

From 1 November 2026, the amended clause drops the prior-agreement and invoice-linkage conditions. A discount given after the supply has been effected can be excluded from the value of supply where two things happen: the supplier issues a credit note for the discount, and the recipient reverses the input tax credit attributable to that discount in accordance with section 34. The credit-note requirement and the reversal obligation stay — what goes is the paperwork test that came before the discount was even given.

Credit notes get an express ground

Section 154 makes the machinery match the new valuation rule. It amends section 34(1) of the CGST Act to expressly add, as a ground for issuing a credit note, the case where a discount referred to in section 15(3)(b) is given after the supply. Suppliers no longer have to squeeze post-sale discounts into the older credit-note grounds; the discount ground is now written into the law itself.

Refunds: provisional refunds for inverted duty structure, and a floor removed for exporters

Section 155 amends section 54 in two places. First, in section 54(6), the provisional-refund facility — under which 90% of the refund claimed can be sanctioned provisionally — is extended to refunds of unutilised input tax credit allowed under clause (ii) of the first proviso to section 54(3), the inverted-duty-structure category. Businesses sitting on accumulated credit because tax on inputs exceeds tax on outputs should see cash released faster, subject to the usual checks. Second, in section 54(14), an exception is carved out for refund claims on account of goods exported out of India with payment of tax, so that the refund floor in that sub-section no longer blocks small tax-paid export refunds — a practical relief for small and courier exporters whose claims previously fell below the threshold.

2. E-invoicing widens to reverse-charge supplies and service imports — Notification 04/2026–Central Tax

Notification 04/2026–Central Tax, also dated 26 October 2026 with the same file number and signatory, amends Notification No. 13/2020–Central Tax (21 March 2020), the e-invoicing notification issued under rule 48(4) of the CGST Rules, 2017. It comes into force on 1 January 2027 — not 1 November — so businesses have two extra months to prepare.

The amendment is a single substitution in the first paragraph of the 13/2020 notification. Where that paragraph previously covered supplies to a registered person or for exports, it now covers four categories: (i) supply of goods or services or both to a registered person; (ii) supply for exports; (iii) supply of goods or services or both received from an unregistered person where the tax is payable on reverse-charge basis by the recipient; and (iv) import of services. In other words, from 1 January 2027, recipient-generated self-invoices for reverse-charge supplies from unregistered persons and invoices for imported services enter the e-invoicing net alongside ordinary business-to-business supplies and exports.

Two cautions. First, this notification only amends the category list — it does not itself lay down thresholds, procedures or invoice formats for the new categories, which flow from the e-invoicing framework around rule 48(4); check that framework before assuming any particular supply is reportable. Second, the direction of travel was already visible: recipient-generated self-invoices for reverse-charge supplies (the RCMDOM and RCMIMP supply types) were already in sandbox testing on the invoice registration portals, so the January date converts a tested capability into a live requirement.

3. Hotel, restaurant, catering and EV rates — Notification 06/2026–Central Tax (Rate)

Notification 06/2026–Central Tax (Rate), dated 27 October 2026 and signed by Md. Adil Ashraf, Under Secretary, amends Notification No. 11/2017–Central Tax (Rate) (28 June 2017) to give effect to the GST Council's 57th meeting recommendations. It takes effect on 1 November 2026. Its theme is same-line credit: where a business charges GST at 2.5%, it may generally take credit only on the same kind of input service, and never above the 2.5% amount.

Hotels, restaurants and catering: credit capped at the 2.5% amount

Serial 7 of the rate table is reworked. For hotel accommodation, credit on goods and services used is barred except credit on the same-line input service — hotel accommodation procured from another hotel-accommodation supplier — and if that supplier charges central tax above 2.5%, credit above the 2.5% amount is barred. The notification illustrates the cap: if A books a room from B at Rs. 7,000 per day, B procures the room from C at Rs. 10,000 per day and C charges 9% (Rs. 900), while B charges 2.5%, B's credit is only Rs. 250, not Rs. 900. The same structure applies to restaurant service other than at specified premises (same-line restaurant-service credit allowed, other credit barred), to catering in trains and at platforms (same-line credit limited to food and drink procured from Indian Railways or IRCTC or their licensees), and to outdoor catering and composite outdoor catering with renting of premises (same-line outdoor-catering credit allowed, with the same above-2.5% cap — illustrated by a Rs. 1,00,000 wedding where B engages C for Rs. 60,000 at 9% (Rs. 5,400) and B charges 2.5% (Rs. 2,500), leaving B credit of only Rs. 1,500).

Electric vehicles: passenger transport and renting get 2.5% or 9%

New entries bring electrically operated vehicles into the rate table where the battery-charging cost is included in the consideration. Transport of passengers by an electrically operated vehicle designed to carry passengers is added at serial 8 (new item (vib)), and renting of such a passenger vehicle and renting of an electrically operated vehicle for transportation of goods are added at serial 10 (new items (ib) and (ic)). Each carries the 2.5% rate on the same-line condition — credit only on the same kind of passenger-transport or vehicle-renting input, capped at the 2.5% amount — or 9% otherwise. The illustration is identical in each case: a Delhi–Gaya trip for Rs. 1,000 where B hires a vehicle with operator from C for Rs. 800 at 9% (Rs. 72) leaves B credit of only Rs. 20 at the 2.5% rate. Fleet operators and rental firms should therefore price on the capped-credit basis, not on full credit recovery.

Delivery services, a dropped paragraph, and two definitions

Serial 12 is also substituted for delivery services: delivery supplied through an electronic commerce operator where the supplier is not liable for registration is placed at 2.5%, provided credit on goods and services used in supplying the delivery service has not been taken. Paragraph 3 of the 11/2017 notification is omitted. And in the Explanation, "goods transport agency" is redefined to mean any person who provides service in relation to transport of goods by road and issues a consignment note by whatever name called, while "electrically operated vehicle" is newly defined as a road vehicle running solely on electrical energy from an external source or from batteries fitted to the vehicle, including E-bicycles.

4. New exemptions and a wider warehousing entry — Notification 07/2026–Central Tax (Rate)

Notification 07/2026–Central Tax (Rate), dated 27 October 2026 with the same file number and signatory, amends Notification No. 12/2017–Central Tax (Rate) (28 June 2017), the exemption notification, again on the 57th Council meeting's recommendations and again effective 1 November 2026. Its changes are mostly additions to the exemption table:

• Helicopter seat-share in the North-East (new item (aa) under serial 15): air travel in a helicopter on a seat-share basis, embarking from or terminating in an airport including a helipad in Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, or at Bagdogra in West Bengal.
• Goods transport agency carve-out (new Explanation under serial 21A): nothing in that entry applies to services by a goods transport agency in relation to goods where those goods are supplied through an electronic commerce operator.
• Warehousing widened (serial 24B substituted): services by way of storage or warehousing of cereals, pulses, fruits, vegetables, and seeds meant for sowing.
• Seamen's Provident Fund Organisation (new serial 31AA): services by the Seamen's Provident Fund Organisation to persons governed by the Seamen's Provident Fund Act, 1966 — nil rated.
• Toll right-of-way (new serial 42A): services by way of grant of exclusive right of way or access, licence and authority to demand, collect and appropriate toll fee by the Central Government, State Government, Union Territory, local authority, governmental authority or government entity — nil rated.
• Coffee curing (new serial 54A): services by way of curing of coffee supplied to coffee cultivators — nil rated, with "curing" carrying the meaning in the Coffee Act, 1942.

Two definitional changes accompany these: "goods transport agency" is substituted with the same road-transport-plus-consignment-note definition as in Notification 06, and "seed" is newly defined to cover plant material used or intended for use in propagation or sowing — including seedlings, tubers, bulbs, rhizomes, cuttings, grafts and tissue-culture plantlets, and seeds of cereals, pulses, oilseeds, fibre, forage, green-manure and sugar crops, fruits, vegetables, spices, flowers, ornamentals and plantation crops, plus planting material. An explanation under serial 18 is also omitted; the notification does not restate its content, so no conclusion about it is drawn here.

Old vs new

Who is affected

The discount and refund changes matter most to manufacturers, distributors and dealers in fast-moving consumer goods, pharmaceuticals, retail and consumer durables, where dealer incentives, volume rebates and year-end targets are routine — and to any business carrying accumulated credit under an inverted duty structure, or exporting goods on payment of tax in small consignments. Hotels, restaurants, caterers and event businesses face the tighter credit cap directly. EV fleet operators, cab aggregators using electric vehicles, and firms renting out electric vehicles for passengers or goods need to rework pricing on the capped-credit basis. Goods transport agencies should note both the new consignment-note-based definition and the e-commerce carve-out. And any business that receives supplies from unregistered persons under reverse charge, or imports services, has a 1 January 2027 systems deadline for e-invoicing.

What to do next

First, before 1 November, review open discount schemes: for any post-sale discount you intend to pass, make sure the process issues a credit note and that the buyer will reverse the related credit — those two steps, not a prior agreement, are now the conditions that protect the value reduction. Second, hotels, restaurants and caterers should recompute margins on the capped-credit basis and check supplier invoices: credit above the 2.5% amount on same-line inputs is simply not available. Third, EV operators should confirm whether their service falls in the new passenger-transport or renting entries and whether charging cost is included in the consideration, since that inclusion is part of the entry. Fourth, exporters with small tax-paid claims and businesses with inverted-duty-structure accumulation should revisit pending and forthcoming refund filings in light of the section 54 changes. Fifth, map every reverse-charge purchase from unregistered suppliers and every service import against the e-invoicing framework well before 1 January 2027 — the notification adds the categories, but thresholds and procedures sit in the wider framework. Finally, do not confuse the two notification series: the Rate-series 06 and 07 of 2026 dated 27 October are the subject of this article's rate sections, while the non-Rate 06 and 07 of the same date belong to the scrap package covered separately.

What this package does NOT cover

Three cautions. First, Notification 03 only brings sections 153 to 155 of the Finance Act, 2026 into force — it does not notify every GST amendment or Council recommendation, and later-phase reforms remain on their own timetable. Second, these four notifications do not change GST rates in general; apart from the EV and delivery entries above, the rate structure is untouched by this package. Third, the notifications substitute entries and clauses, but the operative rates, return entries and filing mechanics around them flow from the CGST Act and Rules — confirm the rate and filing entry for your own supplies with your tax adviser rather than reading them off this summary.

FAQs

From when do the new GST discount rules apply?
From 1 November 2026. Notification 03/2026–Central Tax, dated 26 October 2026, appoints that date for sections 153 to 155 of the Finance Act, 2026.

Can a discount given after the sale now reduce GST value without a prior agreement?
Yes, from 1 November 2026, provided the supplier issues a credit note for the discount and the recipient reverses the input tax credit attributable to it under section 34. The prior-agreement and invoice-linkage conditions no longer apply.

What changes for hotel and restaurant input tax credit?
Credit is capped to same-line input services, and where the same-line supplier charges above 2.5%, credit above the 2.5% amount is barred. Worked illustrations in the notification show, for example, hotel credit of only Rs. 250 where the supplier charged Rs. 900 at 9%.

When does e-invoicing extend to reverse-charge supplies and service imports?
From 1 January 2027, under Notification 04/2026–Central Tax, which amends Notification 13/2020–Central Tax to add those two categories to business-to-business supplies and exports.

Are helicopter rides in the North-East now exempt?
Helicopter travel on a seat-share basis embarking from or terminating in an airport or helipad in the eight North-Eastern states listed in the notification, or at Bagdogra in West Bengal, is exempted under the new entry with effect from 1 November 2026.

Does the package change the GST rate on my goods?
Not in general. Apart from the new EV passenger-transport and renting entries (2.5% or 9%) and the delivery-services entry, this package amends valuation, credit, exemption and e-invoicing provisions rather than the general rate structure.

Why does this article not cite G.S.R. numbers for these notifications?
Because the official CBIC portal copies leave the Gazette numbers blank. The article therefore cites notification numbers, dates and file numbers, which are printed in full in the portal copies.

Sources

Official texts on the CBIC Tax Information Portal (read in full in the portal PDF viewers):

• Notification No. 03/2026–Central Tax, dated 26 October 2026 (F. No. CBIC-20001/1/2026-GST), effective 1 November 2026 — taxinformation.cbic.gov.in/view-pdf/1010780
• Notification No. 04/2026–Central Tax, dated 26 October 2026 (F. No. CBIC-20001/1/2026-GST), effective 1 January 2027 — taxinformation.cbic.gov.in/view-pdf/1010781
• Notification No. 06/2026–Central Tax (Rate), dated 27 October 2026 (F. No. 190354/142/2026-TRU Section-CBIC), effective 1 November 2026 — taxinformation.cbic.gov.in/view-pdf/1010783
• Notification No. 07/2026–Central Tax (Rate), dated 27 October 2026 (F. No. 190354/142/2026-TRU Section-CBIC), effective 1 November 2026 — taxinformation.cbic.gov.in/view-pdf/1010784

Note: the portal copies of these notifications leave the Gazette numbers blank, so this article does not cite G.S.R. or S.O. numbers for them. The non-Rate Notifications 06 and 07 of 2026 are separate instruments (the scrap package) and are not covered here.