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• By CA Vipul Khandhar

1. GST WEEKLY BULLETIN: KEY UPDATES EFFECTIVE FROM: 1 NOVEMBER 2026:

📑 Executive Summary

Following the 57th GST Council Meeting and subsequent statutory notifications (including Notification No. 03/2026-Central Tax), critical changes to the Central Goods and Services Tax (CGST) Act take effect from 1 November 2026.

This weekly newsletter provides a concise summary of operative legal changes, rate rationalizations, and practical action items for businesses and tax practitioners.

1. Substantive Amendments in Law (CGST Act)

• Post-Supply Discounts (Sections 15(3)(b) & 34(1)):
  • Simplified Rules: The statutory mandate requiring post-supply discounts to be backed by a prior agreement (at or before supply) and linked invoice-by-invoice has been removed.
  • Mechanism: Suppliers can now issue tax credit notes under Section 34 for commercial post-sale discounts, provided the recipient reverses the matching Input Tax Credit (ITC).
  • Time Limits: Section 34(2) deadlines (30th November following the end of the financial year or annual return filing) still apply.
• Provisional Refunds for Inverted Duty Structure (Section 54(6)):
  • The facility allowing 90% provisional refund sanction (previously restricted to zero-rated/export supplies) is extended to eligible Inverted Duty Structure (IDS) claims.
• De Minimis Exception for Export Refunds (Section 54(14)):
  • The statutory minimum threshold of ₹1,000 for claiming refunds no longer applies to tax paid on goods exported out of India. Small-value exporters via postal or courier routes can now claim valid refunds.

2. Reverse Charge (RCM), TDS & Scrap Compliance

• Expanded RCM Scope (CT(R) 04/2026): Reverse Charge Mechanism now applies to purchases made by registered entities from Unregistered Persons (URP) for:
  • Waste & scrap of plastics, tyres, and electrical/electronic waste (e-waste).
  • Used cooking oil.
• Section 51 TDS on R2R Scrap Supplies (CT 07/2026): Registered buyers purchasing specified scrap/waste categories from registered sellers must deduct 2% TDS (1% CGST + 1% SGST) for contracts exceeding ₹2.5 lakh (excl. tax).
• Compulsory Registration (CT 06/2026): Suppliers of these specified waste and scrap categories lose the registration exemption for exclusive RCM suppliers and must register if above statutory thresholds.

3. Rate Rationalizations & E-Commerce Delivery Services

• Delivery Services via Platforms (Section 9(5) / CT(R) 06 & 09/2026):
  • E-Commerce Operators (ECOs) are made liable under Section 9(5) for delivery services supplied through their platforms by unregistered sellers.
  • Delivery services for goods ordered via ECOs are taxed at 5% without ITC.
  • Goods Transport Agency (GTA) exemptions for carrying goods for unregistered persons are withdrawn where goods are ordered/supplied through an ECO.
• EV Transport Services: Passenger transport or rental of Electric Vehicles (EVs) with an operator carries a 5% option (with restricted ITC) where battery-charging cost is included in consideration.
• Goods Rates:
  • Psyllium (Isabgol) Seeds: Rated NIL.
  • Retreaded Tractor Tyres: Rate aligned with new tractor tyres (5%).

4. Registration via ECO Warehouses (Rule 14B)

• Virtual Principal Place of Business (PPoB): Small sellers lacking physical premises in a State can register using an ECO’s TCS warehouse as their PPoB.
• Threshold Condition: Tax on monthly B2B output supplies to registered persons must not exceed ₹2.5 lakh.

5. Adjudication & Enforcement Guidance (CBIC Instr. 02/2026)

• Interim CGST Field Direction: CGST field formations have been instructed to pause arrests under Section 69 pending statutory omission. (Note: Section 69 itself remains in force; SGST applicability requires independent State notification).
• E-Way Bill Interception: Interceptions require specific intelligence and written authorization from a Joint Commissioner or higher officer.
• SCN De Minimis Floor: No fresh demand notices under Sections 73/74/74A for aggregate tax/cess amounts below ₹10,000.

 Statutory vs. Pending Status Matrix

Legal Reform / Topic	Legal Status	Operative Date
Post-Sale Discount Credit Notes (s.15/34)	Enacted (Notified)	1 November 2026
90% Provisional Inverted-Duty Refund (s.54)	Enacted (Notified)	1 November 2026
Scrap URP-RCM & Section 51 TDS	Notified Rules	1 November 2026
Delivery Service 5% Rate under s.9(5)	Notified Rules	1 November 2026
Input Service ITC in Inverted Duty Formula	Rule 89(5) Amendment	1 November 2026
Section 17(5) Blocked ITC Liberalization	Council Proposal Pending	Target: April 2027
Complete Omission of Section 69 (Arrest)	Statutory Amendment Pending	Pending Legislation

2. Practical Compliance Checklist for November

1. Review Commercial Schemes: Issue Section 34 tax credit notes for eligible post-sale discounts and obtain proof of recipient ITC reversal.
2. Update Scrap & Waste SOPs: Set up self-invoicing and cash payment processes for URP purchases and apply 2% TDS on qualifying R2R scrap contracts.
3. Reconcile Refund Claims: Prepare inverted-duty refund filings to utilize the 90% provisional sanction route and include eligible input service credits.

A summary of CBIC Instruction No. 02/2026-GST (dated October 30, 2026), issued to implement the trade-friendly recommendations of the 57th GST Council prior to formal legislative amendments:

📋 Overview

• Purpose: Acts as an interim administrative measure of trade facilitation by the Central Government.
• Applicability: Directs Central Tax (CGST) field formations to enforce key GST Council proposals immediately, bridging the gap before the formal statutory amendments take effect (slated for April 1, 2027).

1. Pause on Arrests (Section 69)

• Directive: All CGST field formations are instructed that no further arrests may be carried out under GST.
• Context: Prepares the ground for the recommended future omission of Section 69 of the CGST Act.

2. Rationalization of E-Way Bill Interceptions & Vehicle Inspections (Sections 68, 129, & 130)

• Specific Intelligence Trigger: Conveyances can only be intercepted based on specific intelligence backed by written authorization from an officer not below the rank of Joint Commissioner, who must record reasons to believe.
• Jurisdictional Boundaries for Inspection:
  • An intercepting officer can only inspect/detain goods if the supplier or recipient is located within the officer’s State/UT jurisdiction.
  • If neither party is within the intercepting officer’s jurisdiction, the vehicle/goods must be allowed to pass unhindered, and the information must be transmitted to the proper jurisdictional authority.
• Exceptions to Jurisdiction: Inspection, detention, or seizure is permitted regardless of jurisdiction only if neither an e-way bill nor any origin/destination document is produced.
• Restriction on Seizure/Confiscation: Goods and conveyances in transit cannot be detained or seized for any other unauthorized reasons, nor can they be confiscated under Section 130.

3. Minimum Threshold for Show Cause Notices (Sections 73, 74, & 74A)

• De Minimis Floor: To curb low-value litigation, CGST field formations are directed not to issue show cause notices where the total aggregate tax/cess involved (CGST + SGST + IGST + Compensation Cess) is below ₹10,000.

Note on State (SGST) Enforcement

While this instruction immediately binds Central Tax formations, the CBIC has requested the GST Council Secretariat to circulate it to State GST formations so they may issue parallel instructions to ensure uniform implementation.

3.     KEY RATE, ITC, & RCM CHANGES EFFECTIVE 1 NOV 2026:

Executive Summary

With the rollout of key amendments stemming from the 57th GST Council meeting, a fresh wave of statutory and rate changes took effect on 1 November 2026. This update covers critical shifts in input tax credit (ITC) calculations for inverted duty structures, sweeping reverse charge mechanism (RCM) and TDS provisions on waste and scrap, and targeted rate adjustments for transport and goods.

 1. Inverted Duty Structure & Input Tax Credit (ITC) Overhaul

• Inclusion of Input Services (Rule 89(5)):
  • Starting 1 November 2026, the inverted-duty refund formula under Rule 89(5) is expanded to include eligible input-service ITC availed on or after this date (alongside inputs).
  • Action Item: Finance teams must properly segregate and tag input service credits in ERP systems to unlock previously blocked working capital.
• Removal of Domestic Value Cap:
  • The legacy 5x domestic-value ceiling for zero-rated goods under Rule 89(4)(C) has been officially removed.
• 90% Provisional Refund Sanction:
  • Automated risk-based profiling will now provisionally clear 90% of eligible inverted-duty and zero-rated refund claims swiftly without direct officer intervention.

2. New RCM, TDS, & Compliance Mandates on Waste & Scrap

The government has introduced a multi-pronged compliance framework for waste and scrap transactions, effective 1 November 2026:

• Unregistered to Registered (URP-RCM):
  • Purchases made by registered entities from unregistered suppliers for specific categories—including used cooking oil, plastic scrap, tyre scrap, and electronic waste (e-waste)—now attract GST under the Reverse Charge Mechanism (Notification 04/2026-CTR).
• Narrowing of Registration Exemptions:
  • Suppliers dealing in these specified waste/scrap categories can no longer claim the general exemption meant for exclusive RCM suppliers and must obtain compulsory registration (Notification 06/2026-CT).
• Section 51 TDS on Registered-to-Registered (R2R) Deals:
  • Registered buyers acquiring specified scrap and waste categories from other registered persons must deduct 2% TDS (1% CGST + 1% SGST) on contract values exceeding ₹2.5 lakh (Notification 07/2026-CT).

3. Rate Rationalizations & Service Sector Updates

• EV Passenger Transport & Rentals:
  • Passenger transport or vehicle renting using Electric Vehicles (EVs) is structured under a 5% rate option (with restricted ITC) where the battery-charging cost is bundled into the service consideration.
• E-Commerce Delivery Services:
  • Specified delivery services supplied through E-Commerce Operators (ECOs) by unregistered micro-suppliers fall under Section 9(5) ECO liability at a 5% rate (without ITC).
• Goods-Specific Adjustments:
  • Psyllium (Isabgol) Seeds: Explicitly notified at NIL
  • Retreaded Tractor Tyres: Standardized at 5% aggregate rate under Entry 272A.

4. Commercial Discounts & Trade Reliefs

• Post-Supply Discounts (Sections 15 & 34):
  • The rigid pre-requisite requiring post-supply commercial discounts to be pre-agreed at/before the time of supply and matched invoice-by-invoice has been lifted.
  • Businesses can issue standard Section 34 credit notes for volume rebates and trade schemes, provided the recipient correspondingly reverses the matching ITC. 

5. Actionable Checklist for Finance & Tax Teams

1. Split ITC Ledgers: Update accounting software to isolate input-service ITC from goods ITC to accurately calculate expanded inverted-duty refunds.
2. Audit Scrap Supply Chains: Map all inward supplies of waste, plastics, scrap tyres, and e-waste to determine whether URP self-invoicing (RCM) or R2R TDS applies.
3. Align Discount Workflows: Re-evaluate year-end rebate and volume discount structures against the simplified Section 34 credit note criteria.

Disclaimer:

This publication contains information for general guidance only. It is not intended to address the circumstances of any particular individual or entity. Although the best of endeavour has been made to provide the provisions in a simpler and accurate form, there is no substitute to detailed research with regard to the specific situation of a particular individual or entity. We do not accept any responsibility for loss incurred by any person for acting or refraining to act as a result of any matter in this publication.

(Author is a well known Chartered Accountant practicing in the field of Direct and Indirect Taxes)