GST Notifications 03/2026, 04/2026 & 05/2026-Central Tax: Key Changes to Discounts, Refunds, E-Invoicing and Registration Explained

CBIC issued three Central Tax notifications on 26 October 2026 that bring the Finance Act, 2026 GST amendments into force, widen the scope of e-invoicing, and make one of the largest sets of changes to the CGST Rules, 2017 in recent years. Most changes start on 1 November 2026, with others phased in up to 1 April 2027.

The three notifications at a glance:

1. Notification No. 03/2026-Central Tax

Finance Act, 2026 GST amendments in force from 1 November 2026

This notification uses the power under section 1(2)(b) of the Finance Act, 2026 to appoint 1 November 2026 as the date on which sections 153 to 155 of that Act come into force. These sections amend sections 15, 34 and 54 of the CGST Act, 2017. Until now, they were enacted but not operational.

Post-supply discounts (sections 153 and 154). Under the old section 15(3)(b), a discount given after supply could reduce the taxable value only if it was agreed before or at the time of supply and linked to specific invoices. The substituted clause drops both conditions. A discount is now excluded from value if the supplier issues a credit note and the recipient reverses the related input tax credit, as per section 34. Section 34(1) is amended to allow credit notes for such discounts.

This helps industries such as FMCG, pharma, retail and consumer durables, where year-end incentives and volume rebates are common but rarely documented up front.

Refunds (section 155). Two changes are made to section 54:

• Section 54(6): The 90% provisional refund, earlier limited to zero-rated supplies, now also covers refunds of unutilised ITC on account of an inverted duty structure.
• Section 54(14): The ₹1,000 minimum refund limit no longer applies to refunds for goods exported with payment of tax.

Practical point: The old discount test continues for supplies and credit notes before 1 November 2026. Businesses should review their discount schemes, credit note process and the recipient's ITC reversal confirmation from that date.

2. Notification No. 04/2026-Central Tax

E-invoicing extended to reverse charge purchases and import of services from 1 January 2027

This notification amends Notification No. 13/2020-Central Tax, issued under rule 48(4) of the CGST Rules. That notification decides which supplies need an e-invoice (IRN) from notified taxpayers. Until now, it covered only supplies to registered persons (B2B) and exports.

From 1 January 2027, e-invoicing will apply to four categories:

1. Supplies to registered persons (B2B)
2. Supplies for exports
3. Supplies received from an unregistered person where the recipient pays tax under reverse charge (new)
4. Import of services (new)

In effect, e-invoicing taxpayers must also report their RCM self-invoices on the Invoice Registration Portal. Notification 05/2026 supports this by updating the e-invoice schema (FORM GST INV-01) to version 1.2, with two new supply types: RCMDOM (domestic supply from unregistered person under RCM) and RCMIMP (import of services).

Practical point: Businesses above the e-invoicing threshold should update their ERP or billing software before 1 January 2027 to generate IRNs for RCM self-invoices and import of services.

3. Notification No. 05/2026-Central Tax

CGST (Amendment) Rules, 2026: registration, refunds, ITC blocking and returns

This 98-page notification is issued under section 164 of the CGST Act on the GST Council's recommendation. It comes into force on 1 November 2026 unless a different date is given for a specific change. The main changes are grouped below.

3.1 Registration

New Rule 14B: registration using an e-commerce operator's warehouse. A seller registered in one State can take registration in another State where it has no physical presence. It declares the warehouse of an e-commerce operator (ECO) that collects TCS under section 52 as its principal place of business. Key conditions:

• Goods must be supplied through that ECO.
• Total output tax on B2B supplies (other than to its own registrations on the same PAN) must not exceed ₹2.5 lakh per month.
• The ECO must consent within 7 working days; otherwise the application lapses.
• Biometric Aadhaar authentication, document verification and physical verification happen in the home State, where the seller has a real place of business.
• Books and records are kept at the home State's principal place of business, and the ECO must appoint an authorised representative in each State.
• Registration is deemed cancelled if the ECO withdraws consent and the seller does not amend within 30 days, or if the home State registration is cancelled.

This is a major relief for small online sellers who want to stock goods in marketplace warehouses across States.

Rule 19: amendment of registration (substituted). Changes must be applied for in REG-14 within 15 days. For core changes such as principal place of business, the officer must act within 15 days or within 7 working days of a reply. If not, the amendment is deemed approved. Changes to legal name or partners/directors apply to all registrations on the same PAN. Sub-rule (3), allowing self-amendment of principal place for Rule 14A registrants, applies from 1 December 2026.

Rule 20: cancellation on request (substituted). Key changes:

• Apply in REG-16 within 30 days of the event (not needed on death of a sole proprietor).
• All due returns must be filed, and GSTR-3B must be filed for every period where GSTR-1 or IFF has been filed.
• Registration is suspended on application.
• The portal cancels it automatically where returns and dues are clear and B2B tax liability never exceeded ₹2.5 lakh in any month, or GSTR-10 is filed on time.
• Other cases go to the officer, with a 15-day deemed approval.
• A new procedure (REG-34 to REG-37) lets the officer move the cancellation date to an earlier date, with a 30-day reply window and a 60-day limit.

Rule 21: cancellation grounds (substituted). Registration can be cancelled for: composition annual return pending over 3 months; monthly returns pending for 6 continuous months; quarterly returns pending for 2 continuous tax periods; breach of the Rule 23 provisos; or non-furnishing of bank details under Rule 10A.

Rules 21A, 22 and 23A: automatic suspension and cancellation (from 1 April 2027).

• The portal will suspend registration for the non-filing defaults above and intimate it in REG-31.
• Filing all returns or bank details within 30 days revokes the suspension from the original date.
• If the taxpayer does not comply, registration is deemed cancelled in REG-38.
• Under new Rule 23A, the taxpayer can apply for revocation in REG-21 within 180 days. It is deemed approved once pending returns, tax, interest and late fee are paid. Returns for the cancelled period must then be filed within 30 days.

Rule 83C: GST practitioner enrolment. GST practitioners will now amend enrolment details through REG-14, following the Rule 19 procedure.

3.2 Refunds

The refund rules (Rules 89 to 92) are reworked to speed up processing and widen inverted duty refunds.

Faster processing

• Rule 90: The officer must acknowledge (RFD-02) or point out deficiencies (RFD-03) within 10 days, instead of 15. If neither happens, the application is deemed acknowledged and the section 54(7) time limit runs from the filing date.
• Rule 91: The portal generates the provisional refund order (RFD-04) within 3 working days of acknowledgement, based on system risk evaluation. The officer does not need to revalidate it, and the payment order (RFD-05) can be issued through the portal.
• Rule 92: A new sub-rule (1B) lets the portal generate the final sanction order (RFD-06), showing any amount adjusted against outstanding demands.
• Filing through a Facilitation Centre is removed from Rule 89.

Inverted duty structure (Rule 89(5) substituted)

The new formula is:

Maximum Refund= Turnover of inverted rated supply * Net Supply / Adjusted Total Turnover - Tax Payable on Inverted rated Supply 

• "Net ITC" now includes ITC on eligible input services, meaning services on which ITC is availed on or after 1 November 2026. Earlier, input services were excluded.
• From 1 April 2027, Net ITC also includes ITC on capital goods attributable to the relevant period. It is spread at 1/60th per month over 60 months, only for capital goods ITC availed on or after 1 April 2027, and net of reversals.
• The same capital goods credit is added to the Rule 89(4) formula for zero-rated supplies under LUT from 1 April 2027.

Other refund changes

• Export turnover cap removed (from 1 November 2026): The limit of 1.5 times the value of like domestic goods in Rule 89(4)(C) is omitted.

• ITC debit order (Rule 89(3)): Refund amounts are debited first from IGST credit, then equally from CGST and SGST/UTGST. A shortfall in one is met from the other.

• New declarations in RFD-01: A statement of invoices and ITC for unutilised ITC refunds. A declaration that the applicant has not been prosecuted for tax evasion above ₹250 lakh in the previous five years. From 1 April 2027, a declaration that capital goods in the claim are still in use.

• Merchant exports: New clause (ha) asks for invoice-wise details with the shipping bills of the recipient exporter (0.1% supply under Notification 40/2017-CT (Rate)).

• Invoice "number and date" in the refund documents is replaced with "details" (from 1 December 2026).

• A new FORM GST RFD-01 applies from 1 December 2026.

3.3 Blocking of ITC under Rule 86A (from 1 April 2027)

The credit-blocking power gets a formal order and appeal route.

• The power moves from the "Commissioner or an officer not below Assistant Commissioner" to the "proper officer".
• Blocking must be done by an order in new FORM GST DRC-26, made available on the portal.
• The block lasts until one year from the order, or until the officer lifts it, whichever is earlier.
• The taxpayer can object in new FORM GST DRC-27. After a hearing, the officer either allows the debit (Part A) or rejects the objection (Part B) of new FORM GST DRC-28.

3.4 Input Service Distributor

Rules 36, 39, 54 and 60 are aligned with the ISD law. The term "common input services" is replaced with input services attributable to one or more distinct persons. CGST credit can now be distributed as CGST in the relevant cases under Rule 39. The ISD will get an auto-drafted FORM GSTR-6A. Tables 7 and 11 of FORM GSTR-6 are omitted.

3.5 Returns and due dates

Composition taxpayers do not pay tax on services supplied through an ECO under section 9(5), but these must now be shown separately and included in aggregate turnover. CMP-02 and CMP-04 now include a separate category for persons under section 10(2A).

3.6 Other changes

• E-way bill (Rule 138): Rules for goods moved by railways now also cover metro railway.
• Rule 44: Reversal of ITC on cancellation now also links to REG-16 (from 1 December 2026).
• Rule 159 / DRC-22: Provisional attachment orders now have Part A, and the officer can reject an objection in Part B.
• Demand forms (from 1 April 2027): New FORM DRC-01. DRC-01A must state the earlier proceeding (DRC-01C mismatch, ASMT-10 scrutiny, audit, refund, investigation) and its grounds. DRC-07 must show the SCN number and date.
• REG-16 (from 1 December 2026): Reasons for cancellation revised, including opting out of voluntary registration and transfer of business by amalgamation or demerger.
• Registration forms: REG-01, REG-14, REG-17, REG-22, REG-31, REG-32 and REG-33 are substituted. New forms REG-05A, REG-34 to REG-38 are inserted. REG-01 adds "E-Commerce Operator's Warehouse under rule 14B" as a premises type.

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