Union Budget 2026–27: Key Direct Tax and GST Proposals at a Glance

PART A: DIRECT TAX

1. the Union Budget, the Government has formally announced the completion of a comprehensive review of the Income Tax Act, 1961. Based on this review, a new Income Tax Act, 2025 is proposed to be implemented from 1st April, 2026.

2. New Income Tax Rules and Forms:

Income Tax Rules and return forms will be notified shortly. The revised forms are intended to allow individuals to meet their tax obligations with ease and without unnecessary procedural difficulty.

3. Relaxation of allow ability of Employee Contribution to specified funds– Section 29

Earlier position
- Deduction of employee contribution (such as PF, ESIC, etc.) was allowed only if the amount was deposited within the due date prescribed under the respective labour laws.
- Any delay beyond the statutory due date, even if the amount was paid before filing the income-tax return, resulted in disallowance of deduction.

Proposal
- The due date for depositing employee contribution, for the purpose of claiming deduction, has now been linked to the due date of filing the return of income under section 263(1).
- Employer will be allowed deduction if the employee contribution is deposited on or before the income-tax return filing due date, irrespective of the due date under the respective welfare laws.

4. Exemption on Interest on Compensation under the Motor Vehicles Act, 1988
- Earlier, Interest received on compensation awarded under the Motor Vehicles Act, 1988 was taxable, unless the recipient fell under specific exempt categories listed in Schedule III. For TDS purposes, tax was not deducted only if the interest amount did not exceed Rs. 50,000 in a tax year.
- Now, with the amendment being proposed to include Interest received on compensation awarded under the Motor Vehicles Act, 1988 to an individual or his legal heir under exempt category to provide relief for genuine hardships caused to the victims and their family. Further, TDS is also not be deducted on such interest as per the Budget Proposal.

5. Relaxation for application of Lower TDS/TCS Certificate
As per the proposal of the present budget, for the purpose of ease of compliance to the small tax payers, Now the Tax payer will be able-
- To apply for a Lower or Nil TDS/TCS certificate online using Electronic Verification Code (EVC).
- The Income-tax Authority will examine the application after submission.
- Where the prescribed conditions are satisfied, the Lower or Nil TDS/TCS certificate will be issued electronically.
- If the conditions are not fulfilled, the application shall be rejected by the Income-tax Authority.
- This measure is intended to simplify the process for taxpayers, particularly small taxpayers, by reducing procedural requirements and enabling a fully electronic application and approval mechanism.

6. No requirement to obtain TAN by resident Individual/HUF for non-resident immovable property seller:
- As per the Budget proposal, a resident individual purchasing immovable property from a non-resident will not be required to obtain a Tax Deduction and Collection Account Number (TAN) for deducting tax on such transaction.
- This change removes the requirement to apply for TAN and file TDS returns for a one-time property purchase transaction.
- The Government may introduce a PAN-based mechanism for deduction of TDS in such cases, similar to the system already applicable for purchase of property from resident sellers.
- The proposal is applicable where the seller is a non-resident individual or HUF.

7. Enabling filing of declaration for no TDS through Depository (Erstwhile Form 15G/H)
- Eligible investors can now file a single declaration (Erstwhile Form 15G/H) for no TDS with the depository instead of submitting separate declarations to each payer of dividend, interest on securities, or mutual fund income. The depository will share the declaration with the respective income-paying entities. This facility is available only for listed securities or units held in demat form. Further, the reporting timeline for such declarations by payers to the Income-tax Department has been revised from monthly to quarterly, reducing compliance burden for all parties.

8. Clarification for TDS on Supply of “Manpower”
- Different TDS rates apply to payments made to contractors and to payments made for professional or technical services.
- At present, there has been uncertainty on the applicable TDS rate for supply of manpower, leading to inconsistent deductions.
- The Budget proposes to treat supply of manpower as “work” for TDS purposes hence it will be deducted at contractor rates, depending on the nature of the payer.
- This clarification removes ambiguity and ensures uniform application of TDS provisions in cases involving supply of manpower.

9. Alignment of Income-tax Provisions with RFCTLARR Act
- The RFCTLARR Act, 2013 provides that amount received on account of award or agreement due to compulsory acquisition of land is not subject to income tax. However, the Income-tax Act, 1961 did not contain an explicit exemption for such income, leading to uncertainty. This position was later on clarified by the CBDT through Circular No. 36/2016.
- To remove ambiguity and align the Income-tax Act with the RFCTLARR Act, the Budget now proposes to expressly exempt any income arising from an award or agreement made on account of compulsory acquisition of land, other than cases covered under section 46 of the RFCTLARR Act.

10. Exemption for Disability Pension to Armed Forces Personnel
- Disability pension is paid to Armed Forces personnel who are invalided out of service due to a disability attributable to, or aggravated by, military service. Such pension consists of a service element and a disability element, and has historically been treated as exempt through earlier laws, notifications, and circulars.
- The Budget now proposes to formally provide exemption for both components of disability pension, but only where the individual is invalided out due to service-related disability. This exemption will not apply to cases of retirement on superannuation or otherwise. The proposed exemption will also be extended to eligible paramilitary personnel.

11. Rationalisation of Due Dates for Filing of Return of Income

Category of Assessee	Due Date for Filing Return of Income
Transfer Pricing cases	30th November (Unchanged)
Audited Cases	31st October  (Unchanged)
Assessee other than Audited cases who are filing their return   in ITR 3 & 4 (Business and Profession Cases including partner   of a firm)	31st August (Changed)
Any other assessee, including individuals/HUF filing their return in   ITR-1 or ITR-2	31st July (Unchanged)

12. Revised Return Time limit and fees

Particulars	Earlier Provision	Proposed Provision
Date of filling Revised Return	31st December	31St March

A revised return of income now can be filed up to 31st March subject to payment of the prescribed additional fee if filed after 31^st December, as proposed under the Act.

13. Proposals for Updated Return:

-  As per the Budget 2026 proposal, an updated return can be filed even in cases where losses have been reported. However, such updated return shall be permitted only if it results in reduction of the losses originally claimed in the return of income.

-  Where an updated return is filed in response to a notice issued by the Income-tax Department within the time specified in such notice, the taxpayer shall be liable to pay additional income-tax at an increased rate of 10% over and above the additional tax and interest payable. Once such additional income-tax is paid, the income disclosed in the updated return shall not be liable to penalty.

14. Foreign Assets of Small Taxpayers – Disclosure Scheme, 2026 (FAST-DS 2026)

- The Budget proposes a time-bound disclosure scheme (FAST-DS 2026) to allow small taxpayers to voluntarily declare undisclosed foreign assets or foreign income arising from past or inadvertent non-compliance. The scheme covers cases such as foreign ESOPs/RSUs, dormant overseas bank accounts, and foreign savings or insurance policies.

- Eligible taxpayers may regularise such disclosures on payment of prescribed tax or fee and will receive limited immunity from penalty and prosecution under the Black Money Act, excluding cases involving prosecution or proceeds of crime.

15. Relaxation of conditions for prosecution under the Black Money Act

- The Budget proposes a relaxation in prosecution provisions under the Black Money Act to provide relief in cases of minor and inadvertent non-disclosure of foreign assets where the aggregate value of foreign assets (other than immovable property) does not exceed Rs. 20 lakh. (Retrospective from 1.10.2024)

16. Changes With respect to Block Period Assessments

- Under the existing block assessment provisions, where undisclosed income relating to a third person is found during a search on another person, the same block period applies to both. This results in a full block assessment even where the undisclosed income of the third person relates only to one specific tax year, causing unnecessary compliance burden.

- To address this, the Budget proposes to limit the block period for such other persons only to the tax year(s) to which the undisclosed income relates, instead of applying the entire block period.

- The time limit for completing a block assessment is linked to the date of execution of the last search authorisation or requisition, which often results in different limitation periods within the same search group.

- The Budget proposes to compute the time limit for completing block assessment from the date of initiation of search or requisition, instead of the last authorisation date, and to extend the completion period from 12 months to 18 months.

17. Proposals for Changes in Various Penalties:

I. “Fees” instead of Penalties:

Nature of Default	Existing Position (Penalty)	Proposed Change (Fee)
Failure to get accounts       audited/Failure to Furnish tax     audit report	Penalty equal to lower of 0.5% of   turnover / gross receipts or  Rs. 1,50,000	Penalty Converted to fee with   graded slabs of Rs. 75,000 or   Rs. 1,50,000, based on period of   delay
Failure to furnish accountant’s   report for international or   specified  domestic transactions	Fixed penalty of Rs. 1,00,000	Penalty Converted to graded fee   of Rs. 50,000 or Rs. 1,00,000,   depending on period of delay
Failure to furnish statement of   financial transactions / reportable   account	Penalty of Rs. 500 per day of default	Penalty of Rs. 500 per day of   default   (No Change)
Continued failure after notice	Penalty of Rs. 1,000 per day, with   no  upper cap	Penalty of Rs. 1,000 per day, with   capping of Rs. 1,00,000

II. Imposition of Penalty within the Assessment Order

- At present, assessment and penalty proceedings are separate, leading to multiple notices, prolonged litigation, and uncertainty for taxpayers.

- The Budget proposes that penalty for under-reporting or misreporting of income will be imposed directly in the assessment order itself, instead of initiating separate penalty proceedings later.

- The requirement of issuing a separate show-cause notice and passing an independent penalty order will be dispensed with for such cases.

- Interest for non-payment of demand will be charged only after disposal of appeal by CIT(A) or ITAT, as applicable.

III.  Increase in Maximum Penalty for Non-compliance with Information Collection

- Earlier, where a person failed to furnish information called for by the income-tax authorities during collection of information from the business premises, a maximum penalty of Rs. 1,000 could be imposed.

- The Budget proposes to increase the maximum penalty to Rs. 25,000 for failure to comply with directions to furnish information.

IV.  Expanding the scope of immunity from penalty or prosecution under section 440 of the Act

- At present, immunity from imposition of penalty and initiation of prosecution is available only in cases of under-reporting of income, subject to payment of tax and interest and non-filing of appeal against the assessment order. Where under-reporting arises due to misreporting of income, such immunity is not available, even though a higher tax is payable in lieu of penalty.

- The Budget now proposes to expand the scope of immunity from penalty or prosecution under section 440/270AA of the Act, where under-reporting of income is a consequence of misreporting, provided the prescribed conditions are fulfilled.

- In such cases, immunity will be available on payment of additional income-tax at 100% (Section 270AA) or 120% (Section 440) of the tax payable, as applicable.

V. Penalty for Non-furnishing or Furnishing Incorrect Information on Crypto-asset Transactions

- The Act requires prescribed reporting entities to furnish statements containing details of crypto-asset transactions. To ensure compliance and discourage defaults, the Budget proposes to introduce specific penalty provisions for failure to comply with these reporting requirements.

- Under the proposal,

(i)  a penalty of Rs. 200 per day will be levied for non-furnishing of the statement

(ii) a fixed penalty of Rs. 50,000 will apply for furnishing inaccurate information or failure to rectify such inaccuracies.

18. Proposals For Co-Operatives

- A benefit of deduction to cooperative societies in respect of dividends received from other cooperative societies is now extended to the new regime to the extent such dividends are distributed to their members.

- Further, notified federal cooperative societies will be allowed a deduction for dividends received from companies for three years, up to Tax Year 2028-29 under both old and new regime, provided the investments were made on or before 31 January 2026 and such dividends are further distributed to members.

- The Budget proposes to expand the scope of deduction available to primary cooperative societies engaged in supplying produce of their members. In addition to milk, oilseeds, fruits, and vegetables, the deduction will now also cover profits from activities such as supply of cattle feed and cotton seeds, where such supplies are made by a primary cooperative society to a federal cooperative society, the Government, or specified public entities.

- The Budget proposes to expand the definition of “co-operative society” to include societies registered under the Multi-State Cooperative Societies Act, 2002, in addition to those registered under State and Union Territory cooperative laws.

- It is proposed that no tax shall be deducted at source on interest income (other than interest on securities) credited or paid to any co-operative society engaged in the business of banking, including co-operative land mortgage banks, thereby aligning the provisions with the Income-tax Act, 1961.

19. Changes in TCS Rates

Sr No	Particulars	Current Rate	Proposed Rate
1	Sale of alcoholic liquor for human   consumption	1%	2%
2	Sale of tendu leaves.	5%	2%
3	Sale of scrap.	1%	2%
4	Sale of minerals, being coal or lignite or   iron ore.	1%	2%
5	Remittance under Liberalised Remittance   Scheme (amount exceeding Rs10 lakh)	(a) 5% – education /   medical  (b) 20% – other   purposes	(a) 2% – education /   medical  (b) 20% – other   purposes
6	Sale of overseas tour programme package   (travel, hotel, boarding, lodging, etc.)	(a) 5% up to Rs10 lakh  (b) 20% above Rs10 lakh	2%

20. Tax Exemptions for certain Foreign Entities/NR

I. Data Centre Activity

-The Budget proposes to exempt income earned by foreign companies/Non-Resident etc.  from procuring data centre services in India from specified Indian data centres, in order to promote investment in data centres and support India’s artificial intelligence and digital infrastructure ecosystem. This exemption will apply to income accruing or arising in India for a period up to the tax year ending 31st March 2047.

Conditions

The exemption will be available only:

- Where the services are procured from a specified data centre, which is approved and notified by the Central Government

- Owned and operated by an Indian company.

- Services are provided to Indian users, the foreign company must route such services through an Indian reseller entity

II. Capital Equipment

- Income earned by a foreign company from supplying capital goods, equipment, or tooling to an Indian contract manufacturer engaged in the production of electronic goods not to be included in the total income earned by such entity with certain conditions. This benefit will be available up to Tax Year 2030–31.

Conditions

The exemption will apply where the Indian contract manufacturer is

-  Located in a customs bonded area

-  Produces electronic goods on behalf of the foreign company for consideration.

21. Disallowance of Interest Deduction against Dividend Income

- Under the existing provisions, interest expenditure incurred for earning dividend income or income from mutual fund units is allowed as a deduction, subject to a cap of 20% of such income. The Budget now proposes to withdraw this benefit entirely, providing that no deduction for interest expenditure shall be allowed against dividend income or income from units of mutual funds.

22. Proposal for IFSCs

Earlier provisions

- Units in IFSC were allowed a 100% deduction for 10 consecutive years out of 15 years.

- Offshore Banking Units (OBUs) were allowed a 100% deduction for 10 consecutive years.

Proposed provisions

- Units in IFSC will now be eligible for a 100% deduction for 20 consecutive years out of 25 years.

- Offshore Banking Units (OBUs) will be eligible for a 100% deduction for 20 consecutive years.

- Business income earned after the deduction period will be taxed at a concessional rate of 15%.

23. Changes In Minimum Alternative Tax (MAT)

Following two businesses have been added in the EXCLUSION category of MAT for Non-Resident Entity opting for Presumptive Taxation:

1. Business of operation of cruise ships

2. Provision of services or technology for setting up electronics manufacturing facilities in India for resident companies

-  With effect from 01.04.2026 under old regime No new mat credit to be allowed

-  Rate of MAT Reduced from 15% to 14%

-  Setoff of MAT credit under new regime to be allows to domestic companies only to the extent of 25% of Tax Liabilities.

-  For the foreign company, setoff of MAT Credit to be allowed to the extent of difference of Tax on total income and MAT for the year in which normal tax is higher that the MAT.

24. Exemption for Sovereign Gold Bonds – Clarification

Under the existing provisions, capital gains arising on redemption of Sovereign Gold Bonds (SGBs) are exempt from tax, the Budget proposes to clarify that such exemption will be available only where the bond is subscribed at the time of original issue and held continuously until maturity.

25. Taxation of buyback of shares

- Earlier, under the existing provisions, the amount received by a shareholder on buy-back of shares was treated as dividend income and taxed accordingly. Separately, the cost of acquisition of shares extinguished on buy-back was allowed as a capital loss.

- It is now proposed that the entire consideration received on buy-back shall be taxed under the head “Capital Gains”, replacing dividend taxation. Further, to address the special position of promoters in buy-back decisions, an effective tax rate of 30% is proposed for promoter individuals, while promoter companies will be taxed at an effective rate of 22% on gains arising from buy-back.

26.  Increase in Securities Transaction Tax (STT) on options and futures 

The Bill proposes to increase the Securities Transaction Tax (STT) applicable on trading in the stock market, specifically on derivative instruments like options and futures:

- Option sales: STT increased from 0.10% to 0.15% on the option premium

- Options on exercise: STT increased from 0.125% to 0.15% on the intrinsic value

- Futures trading: STT increased from 0.02% to 0.05% on the traded value

PART B: INDIRECT TAX

(A) CUSTOM

The proposals seek to rationalise Customs and Central Excise duties to support manufacturing, enhance exports, and correct inverted duty structures.

AMENDMENT TO THE CUSTOMS ACT, 1962

1. Extension of Customs Jurisdiction

-  The scope of the Customs Act is extended beyond India’s territorial waters specifically for fishing and fishing-related activities, enabling customs control over such operations carried out in the Exclusive Economic Zone and high seas. (Sub-section (2) of section 1)

2. Definition of Indian-Flagged Fishing Vessel

- A specific definition of “Indian-flagged fishing vessel” is introduced, bringing clarity and legal certainty for regulating fishing activities under the Customs framework.

3. Nature of Penalty under Section 28

- Any penalty paid under Section 28(5) on determination of duty will now be deemed as a charge for non-payment of duty, strengthening recovery provisions and clarifying the legal character of such penalties.

4. Extended Validity of Advance Rulings

- Advance rulings will now remain valid for 5 years (earlier 3 years), or

- Until there is a change in law or facts, whichever is earlier.

- Existing advance rulings in force can also be extended to 5 years upon application by the applicant.

5. Special Provisions for Fishing Beyond Territorial Waters

Introduces a comprehensive framework for Indian-flagged fishing vessels operating beyond territorial waters, including:

- Duty-free import of fish harvested outside territorial waters.

- Fish landed at a foreign port treated as export of goods.

- Power to prescribe procedures, declarations, custody, assessment, clearance, transit, and transhipment through rules and regulations.

6. Simplification of Inter-Warehouse Movement

- Removes the requirement of prior permission of the proper officer for transfer of warehoused goods from one bonded warehouse to another, subject to prescribed conditions to promoting ease of doing business.

7. Custom proposals relate to sector-specific measures: Custody of Imported and Export Goods

- Expands the Board’s regulatory powers to include custody of goods, in addition to examination, for imported and export goods and allowing better control and procedural clarity under customs regulations.

8. Review of exemptions and tariff simplification

The Government proposes to rationalise long-standing customs duty exemptions on items now manufactured domestically or having negligible imports.

- A review was carried out of 124 conditional exemptions / concessional BCD entries under Notification No. 45/2025-Customs dated 24.10.2025, expiring on 31.03.2026.

- 102 entries are being extended up to 31.03.2028, with or without modifications.

- 22 entries will lapse on 31.03.2026 and will not be continued.

Further, to simplify rate determination, certain effective duty rates will be shifted from exemption notifications into the Customs Tariff Schedule, with sector-specific exemptions detailed in the table below.

 

Sector	Item / Import Covered	Nature of Exemption / Benefit
Energy Transition	Capital goods for manufacturers of battery energy storage systems using lithium-ion cells	Basic Customs Duty exemption
Renewable Energy	Sodium antimonate used in manufacture of solar glass	Basic Customs Duty exemption
Civil Aviation	Parts and components for manufacturing civilian and training aircraft	Basic Customs Duty exemption
Defence Aviation	Raw materials for manufacture of aircraft parts for defence maintenance and repair (MRO)	Basic Customs Duty exemption
Nuclear Power	Imports required for nuclear power projects (all plant sizes)	Basic Customs duty exemption extended till 2035
Critical Minerals	Capital goods for processing critical minerals in India	Basic Customs Duty exemption
Electronics Manufacturing	Parts used in manufacture of microwave ovens	Basic Customs Duty exemption
Marine Exports	Specified inputs used in seafood exports	Duty-free import limit increased from 1% to 3% of previous year’s FOB export turnover
Leather Exports	Specified inputs for manufacture of shoe uppers	Duty-free import facility extended, similar to footwear exporters
Textile Exports	Final products in leather or textile sectors	Export completion period extended from 6 months to 1 year

9. One-Time Concessional DTA Sales for SEZ Manufacturing Units:

- As a one-time measure, eligible manufacturing units in Special Economic Zones (SEZs) will be permitted to sell goods in the Domestic Tariff Area (DTA) at concessional rates of duty. Such sales will be restricted to a prescribed proportion of the unit’s exports. Necessary regulatory amendments will be notified to operationalise this facility while ensuring a level playing field for domestic units.

10. Customs Duty Relief on Personal Imports and Life-Saving Medicines

- Individuals importing goods for personal use will now pay 10% customs duty instead of 20%.

- Seventeen medicines, including those used for cancer treatment, will be exempt from basic customs duty to reduce patient costs.

- Patients suffering from seven additional rare diseases will be allowed duty-free personal imports of medicines and special medical foods.

11. Trust-Based Reforms in Customs Procedures

- Duty deferral period for Tier 2 and Tier 3 Authorised Economic Operators (AEOs) increased from 15 days to 30 days.

- Eligible manufacturer-importers to receive the same duty deferral facility, encouraging transition to Tier-3 AEO status.

- Validity of advance rulings binding on Customs extended from 3 years to 5 years.

- Trusted importers with established supply chains to be recognised in the risk management system, reducing repeated cargo verification.

- Export cargo with electronic sealing to be cleared directly from factory premises to port.

- For imports not requiring compliance, filing of Bill of Entry and arrival of goods will trigger automatic customs clearance, enabling immediate release.

- Customs warehousing framework to shift to an operator-centric system with self-declaration, electronic tracking, and risk-based audits, reducing officer dependency, delays, and compliance costs.

12. Ease of Doing Business through Customs Reforms

- All cargo clearance approvals from multiple government agencies will be processed through a single, interconnected digital window by the end of the financial year.

- Clearance processes for food, drugs, plant, animal, and wildlife products-covering nearly 70% of interdicted cargo-will be brought onto this system by April 2026.

- Goods not requiring any regulatory compliance will be cleared immediately by Customs upon completion of online registration and payment of duty.

- A unified and scalable Customs Integrated System (CIS) will be rolled out over the next two years to manage all customs processes.

- Deployment of non-intrusive scanning using advanced imaging and AI-based risk assessment will be expanded in phases to cover all containers at major ports.

13. New Export Opportunities

- Fish caught by Indian fishing vessels in the Exclusive Economic Zone (EEZ) or on the high seas will be exempt from customs duty.

- Landing of such fish at foreign ports will be treated as export of goods, with safeguards to prevent misuse during catch, transit, and transhipment.

- The existing value cap of Rs.10 lakh per consignment on courier exports will be completely removed to support small businesses, artisans, and start-ups.

- Processing of rejected and returned courier export consignments will be improved through better use of technology.

14. New Baggage Rules, 2026: Passenger Convenience and Taxpayer Relief

- The Baggage Rules, 2016 are being replaced by the Baggage Rules, 2026.

- Effective from midnight of 02.02.2026

- Baggage clearance rules for international travellers will be revised to address passenger concerns, enhance duty-free allowances in line with current travel realities, and provide clarity on temporary import and export of goods.

- Honest taxpayers willing to settle disputes will be allowed to close cases by paying an additional amount in lieu of penalty, reducing the stigma associated with penalties and encouraging voluntary compliance.

(B) EXCISE

1. NCCD rate change on chewing tobacco, jarda & gutkha

NCCD rate in the Seventh Schedule is increased from 25% to 60% for:

- Chewing tobacco (HS 2403 99 10)

- Jarda scented tobacco (HS 2403 99 30)

- Other tobacco products incl. gutkha (HS 2403 99 90)

Effective from 01.05.2026

2. Central Excise relief on blended CNG containing biogas / CBG

While calculating central excise duty on blended CNG, the following will now be excluded from transaction value:

- Value of biogas / compressed biogas (CBG)

- GST paid on biogas / CBG portion

Effective from 02.02.2026

3. Higher excise duty on unblended diesel postponed

- Additional excise duty of Rs.. 2 per litre on unblended diesel

Implementation deferred till 31.03.2028

(C) GOODS AND SERVICE TAX

1. Removal of Mandatory Requirement to Link Post-Sale Discount with Specific Invoices (Clause 137)

- The amendment seeks to do away with the mandatory requirement of linking post-sale discounts to specific tax invoices. Instead, the benefit of exclusion of such discount from the value of supply shall be available on issuance of a credit note (under section 34), provided that the recipient reverses the corresponding input tax credit (ITC).

- Clause 137 proposes to relax the rigid conditions prescribed under section 15(3) of the CGST Act in respect of post-sale discounts.

2. Statutory Inclusion of Post-Sale Discounts in Credit Note Provisions (Clause 138)

- Section 34 will clearly recognise post-supply discounts under section 15(3)(b) as a valid reason for issuing credit notes.

- This brings statutory alignment between:

i. Valuation provisions (section 15) and

ii. Documentation mechanism (section 34).

3.  Extension of Provisional Refund and Removal of Refund Threshold for Exports

Two changes related to GST refunds.

i. First, it extends the benefit of provisional refund to cases where refund arises due to an inverted duty structure. This means eligible taxpayers will now receive a part of their refund quickly, instead of waiting for full verification.

ii. Second, it removes the minimum threshold limit for claiming refund in cases where goods are exported on payment of tax. As a result, exporters will be able to claim refund of GST paid even for small amounts, improving cash flow and ease of doing business.

4. Temporary Empowerment of Existing Authorities to Hear Appeals Pending Constitution of National Appellate Authority

- Until this National Appellate Authority is formally set up, this amendment empowers the Government, based on the Council’s recommendation, to authorize any existing authority to hear appeals that are otherwise meant to be heard by the National Appellate Authority.

- To ensure flexibility, the clause further provides that detailed procedural provisions applicable to the National Appellate Authority will not apply to such existing authority.

- Additionally, an explanation is inserted to clarify that the term “existing authority” also includes a Tribunal, removing any ambiguity about who can be empowered to hear such appeals

5. Alignment of Intermediary Services with General Place of Supply Rules

- Major change in the place of supply rules for intermediary services under IGST.

- At present, intermediary services are treated differently and the place of supply is linked to the location of the supplier, which often results in such services being taxed in India even when provided to foreign clients.

- Amendment seeks to remove this special rule and align intermediary services with the general place of supply principle. As a result, the place of supply for intermediary services will be determined based on the location of the recipient of services.

Disclaimer: This material and the information contained herein is intended for clients and other Chartered Accountants to provide updates and is not an exhaustive treatment of such subject. We are not, by means of this material, rendering any professional advice or services. It should not be relied upon as the sole basis for any decision which may affect you or your business.