India's GST Changes From 1 November: What SMEs Must Do

The first set of reforms from India's 57th GST Council meeting becomes law on 1 November 2026. Post-sale discounts get simpler, inverted duty refunds get faster, and buyers of scrap and waste take on new tax duties. If you sell, buy or export from India, a few things need checking now.

What happened

The GST Council met on 8 October in New Delhi. When we covered its recommendations, none of them was law yet. That has now changed for the first batch.

The government's Notification No. 03/2026-Central Tax, dated 26 October, brings Sections 153 to 155 of the Finance Act, 2026 into force from 1 November, according to TaxGuru's legal analysis. These sections amend the CGST Act in four places:

• Post-sale discounts (Section 15(3)(b)). Until now, a discount given after the sale only reduced the taxable value if it was agreed at or before the sale and linked to specific invoices. From 1 November, that prior-agreement condition goes. The discount counts if the supplier issues a credit note and the buyer reverses the matching input tax credit.
• Credit notes (Section 34). The law now expressly allows a credit note for such a post-sale discount, which should help settle many disputes with tax officers.
• Provisional refunds (Section 54(6)). Refunds of up to 90% on a provisional basis were only available for zero-rated supplies such as exports. They now extend to eligible inverted duty claims, where tax on inputs is higher than tax on sales.
• Small export refunds (Section 54(14)). The ₹1,000 minimum no longer applies to refunds on goods exported with tax paid.

IANS reported that the 90% upfront refund is "subject to risk checks", and that automated sanctioning of refunds will apply only to new claims filed after 1 November, not to pending ones.

A second batch is targeted for 1 April 2027 because it needs changes to central and state GST laws. That batch includes the changes to arrest provisions, prosecution thresholds, e-way bill rules and a ₹10,000 minimum for issuing show cause notices, as reported by The Hans India.

New rules for buying scrap and waste

Separate notifications, also effective 1 November, tighten the rules on scrap. CAclubindia's summary sets out three changes:

• Reverse charge. When a registered business buys used cooking oil, plastic waste and scrap, tyre waste and scrap, or electrical and electronic waste and scrap from an unregistered person, the buyer now pays the GST.
• Registration. Suppliers of these items, and of metal scrap, can no longer rely on the exemption from GST registration.
• TDS. Registered buyers of these goods from other registered suppliers must now deduct tax at source under GST.

If your factory, workshop or warehouse sells or buys scrap, even occasionally, this touches you.

What this means for your business

For Indian SMEs that give rebates. Year-end volume rebates and promotional schemes are common in distribution. Until now, many of these were fought over because no agreement existed before the sale. The new rule is cleaner, but it moves the risk onto paperwork. You need a credit note, and you need evidence that your customer has reversed the credit.

For example, a Pune electrical distributor giving its dealers a 2% rebate in December would issue credit notes against those dealers and ask each one to confirm the input tax credit reversal in writing.

For manufacturers with inverted duty. If your input tax credit keeps piling up because inputs are taxed higher than outputs, faster provisional refunds can release working capital. Clean claims will move fastest, so tidy reconciliations matter more than ever.

For GCC groups with Indian subsidiaries. Many groups in Qatar, the UAE and Saudi Arabia run a trading or service company in India. Check that your Indian team has updated its discount and scrap processes, and factor faster refunds into your group cash forecast once the first claims come through.

For small exporters shipping to the Gulf. Courier and postal exporters who pay tax on export goods can now claim small refunds that were previously below the ₹1,000 floor.

The CBIC also issued circulars on 26 October covering registration timelines, show cause notices and export proceeds. Sarkaritel reports that applications with successful Aadhaar authentication should generally be processed within seven working days, and others within 30 days.

Your checklist for this week

• List every discount, rebate and incentive scheme you run, and confirm each one will be settled through a GST credit note.
• Add a step to collect written confirmation from customers that they have reversed input tax credit on those credit notes.
• Check your accounting system can report credit notes for post-sale discounts correctly in GSTR-1.
• If you have an inverted duty structure, prepare your unused credit refund claim and the supporting reconciliation now.
• Identify every scrap or waste sale and purchase. Check who is registered, who pays tax under reverse charge, and whether TDS applies.
• Update your compliance calendar with 1 November and the 1 April 2027 target date for the second batch.
• Read the official notifications on the CBIC website and check the details with your GST adviser before you change any process.

If you track these dates manually, a shared compliance calendar such as the one in NexCFO AI can help your team see what falls due each month.

The rules got simpler, but only for businesses whose paperwork is in order.