Maharashtra GST Amendment Act 2026: What Has Changed in Discounts, Credit Notes and Refunds?

Maharashtra has amended three crucial provisions in the State GST law. The Maharashtra Goods and Services Tax (Amendment) Act, 2026 (Maharashtra Act No. XXVII of 2026) was published on 7 July 2026 in the Maharashtra Government Gazette as notified by the state’s Governor.

The amendment relates to sections 15, 34 and 54 of the Maharashtra Goods and Services Tax Act, 2017, which pertain to issues of discounts allowed after supply, credit notes raised for the same, and provisions regarding certain refunds.

With reference to section 15, the amendments that specify the nexus among the post-supply discount, the credit note issued in respect of the discount by the supplier, and the reversal of the Input Tax Credit relating to the same by the receiver should be taken into account by the taxpayers. Further, organizations that are claiming a refund on account of the inverted structure of duties should keep in mind the amendments made to section 54.

Another point needs to be considered. Although the Act was published on 7 July 2026, it is not appropriate to consider that date as the commencement date of each amendment. The Maharashtra Government can bring the provisions of the Act into force by a separate notification, it can apply them prospectively or retrospectively, and different provisions may commence from different dates.

What Is the Regulatory Framework Behind the Amendment?

The Maharashtra Goods and Services Tax Act, 2017 (MGST Act) is the State GST law that operates in conjunction with the overall GST regime.

The 2026 Amendment Act amends certain provisions of the said law instead of introducing a new tax system.

There are three sections we need to focus on:

Section 15 - Value of Supply

Section 15 addresses the valuation of supplies and includes provisions relating to discounts and the circumstances under which a discount could be excluded when determining the value of supply.

Section 34 - Credit and Debit Notes

Section 34 governs the issue and GST treatment of credit notes and debit notes. Credit notes matter where the value or tax attached to an earlier supply needs to be adjusted in circumstances permitted under the law.

Section 54 - Refund of Tax

Section 54 covers GST refunds. It includes, among other things, refund of unutilized input tax credit in permitted situations and the mechanism for provisional and final settlement of qualifying refund claims.

The 2026 amendments accordingly should be read in conjunction with Section 34 to understand Section 15 and read with the prevailing refund conditions to comprehend the changes made to Section 54 of the Maharashtra GST Act.

Which Sections of the Maharashtra GST Act Have Been Amended?

The following table provides a snapshot of the amendments before examining each change in detail.

The amendments in Sections 15 and 34 go hand in hand, while the two amendments to Section 54 pertain to different refund issues and hence should be analyzed separately.

What Has Actually Changed Under the Maharashtra GST Amendment Act, 2026?

Businesses must focus primarily on three of the amendments that took place.

1. The Rule for Post-Supply Discounts Has Changed

Section 15(3)(b) has been amended. According to the new rule, a discount received after the supply of goods or services can be regarded as a discount only if the supplier issues a credit note for the said discount and the recipient reverses the input tax credit in respect of such a discount as per section 34.

Thus, the issuance of a credit note and reversal of input tax credit by the recipient become an integral part of adjusting such a discount.

2. Section 34 now expressly recognizes such discount credit notes

A corresponding amendment has been made to Section 34(1). The provision now expressly includes a case where a discount referred to in Section 15(3)(b) is given.

3. Two GST refund provisions have been changed

Section 54(6) has been expanded to include specified unutilized input tax credit. Section 54(14) has been separately amended for refund claims involving goods exported out of India with payment of tax.

Though these amendments appear technically complex, they could impact internal approval processes for discounts, billing of credit notes, tracking of recipient ITC, and refunds of certain claims.

Detailed Section-Wise Analysis

Amendment to Section 15: What Has Changed for Post-Supply Discounts?

Post-supply discount refers to a discount on account of which the consideration is paid or becomes payable after the supply, that is, the time when the right to payment has arisen. This transaction would attract GST based on conditions as specified in Section 15.

In its original form, Section 15(3)(b) provided that for claiming such discounts, the said discount has to be arrived at by an agreement entered into at or before the time of supply and should be specifically mentioned in the invoices. The recipient shall reverse the input tax credit attributable to such discounted amount. The 2026 Act replaces that clause.

The substituted wording now concentrates on two points:

• The supplier must issue a credit note for the discount, and
• The recipient must reverse the input tax credit attributable to that discount, in accordance with Section 34.

The earlier explicit mention of a pre-existing agreement and the specific linkage of the invoice are absent from the substituted clause. In other words, there is a departure from the wording of section 15.

Now, businesses need to be careful when interpreting this amendment to avoid taking it as 'all post-sale discounts are now automatically deductible'.

Instead, the safer way to interpret would be: in instances where a business wants a post-supply discount to be treated as contemplated by amended section 15(3)(b), the credit note and recipient ITC will become relevant.

And the question for Finance teams now is not only 'was a discount given?' but also 'was the GST aspect taken care of?'

Amendment to Section 34: Why Is the Credit Note Now More Important?

Section 34 already provided for credit notes in situations such as where the taxable value or tax charged in an invoice exceeded the amount payable, goods were returned, or the goods or services supplied were found to be deficient.

The new law in 2026 contains an additional explicit situation, a discount mentioned under Section 15(3)(b).

Section 15 has actually been amended to refer to a supplier who issued a credit note explicitly.

As such, a more direct connection can now be made:

Post-supply discount ➜ GST credit note ➜ recipient ITC adjustment

As such, a commercial credit adjustment shouldn’t be treated in isolation from the GST position. So, if the sales team approves a discount, the accounts team raises a credit note, and the GST team looks at mitigating the tax effect, those three stories must be compatible. If the recipient’s ITC position isn’t consistent with the supplier’s adjustment where reversal is necessary, the GST side of the story may become challenging to justify. As such, GST compliance services and an appropriate internal reconciliation process may be necessary, particularly for businesses that issue a significant volume of dealer, distributor or customer credit notes.

Amendment to Section 54(6): What Changes for Inverted Duty Refunds?

The first refund amendment targets Section 54(6).

An inverted duty structure broadly arises where the GST rate on eligible inputs is higher than the GST rate on output supplies, resulting in accumulation of input tax credit, subject to the conditions and exclusions contained in Section 54(3).

The current Section 54(3) takes into account the existence of accumulated credit due to the difference between the input tax rate being greater than that of the output tax as one of the specified instances when a refund of unused ITC can be granted.

Prior to the amendment, Section 54(6) provided for the provisional refund in the case of zero-rated supply claims. In particular, it gives authority to the proper officer, subject to certain conditions, to provisionally refund  90% of the amount of tax claimed in the category falling under that provision.

The Maharashtra GST Amendment Act, 2026 inserts another category into Section 54(6): unutilized ITC allowed under clause (ii) of the first proviso to Section 54(3).

In other words, it includes the category of inverted-duty ITC as aforesaid within the scope of the aforesaid Section 54(6) from the date of commencement of the amendment.

This does not mean that every inverted duty refund automatically gets paid or that the claimant automatically receives 90% merely by filing an application.

Businesses still need to consider:

• Whether the accumulated ITC is eligible for refund,
• Whether the claim falls within the applicable Section 54(3) category,
• the required conditions and safeguards,
• documentation for supporting the refund claim,
• date of commencement of the amendment in 2026, and
• other refund claim provisions.

Businesses with regular accumulation of ITC may therefore want to review their refund position through suitable GST refund advisory services rather than treating the amendment as an automatic cash-flow benefit.

Amendment to Section 54(14): What Changes for Certain Export Refunds?

Section 54(14) currently imposes a minimum amount restriction. Section 54(14) provides that a refund under section 54(5) or 54(6) shall not be paid if it is less than ₹1,000.

The 2026 Amendment Act makes an exception to such a restriction.

The newly inserted words carve out an exception to the effect that the restriction shall not apply where a claim for refund of tax is made on account of goods exported out of India with payment of tax.

In other words, the restriction in Section 54(14) of ₹1,000 would stop applying in respect of that particular category of export refunds from the date on which the amendment comes into force.

The scope of the exception is specifically narrow. It is confined to:

• goods,
• exported out of India, and
• Exported with payment of tax.

It must not be assumed to be a blanket exception to the minimum refund rule for all exporters, all zero-rated supplies and all categories of GST refunds.

How Have the GST Rules for Post-Supply Discounts Changed?

This is the most commercially significant aspect of the amendment to many businesses.

Discounts are frequently negotiated by sales teams on grounds unrelated to tax. A dealer may be entitled to a year-end incentive, a distributor to a turnover rebate and a customer to a deferred price adjustment.

The commercial discount is one thing. Its GST treatment is another.

Under the earlier Section 15 wording, two issues were expressly built into the provision: the discount had to arise from an agreement entered into at or before supply and had to be specifically linked to relevant invoices. ITC attributable to the discount also had to be reversed.

The 2026 substituted clause has deleted the first two conditions in their entirety. The focus now lies on the issuance of the GST credit note and the recipient's reversal of the ITC.

For businesses, this creates an emphasis on the factual trail of tax recorded in the books of the supplier and the recipient.

• Was a valid credit note issued?
• Is the adjustment covered by the amended Section 15 provision?
• Has the recipient accounted for the attributable ITC?
• Do the supplier's and recipient's books show the same entry?
• Has the relevant amendment been in force for the transaction period?

These procedural queries are much more relevant than simply classifying a discount without evidence.

How Do Discount, Credit Note and ITC Reversal Work Together?

The easiest way to understand the amendment is to consider the sequence. 

The law looks beyond the supplier. The supplier may raise the discount and issue the credit note, but the recipient's ITC treatment also comes into play in light of the amended provision. Reconciliation therefore involves more than a purely accounts-focused exercise and instead becomes part of the compliance trail for GST adjustment.

What Should Businesses Understand About GST Credit Notes After the Amendment?

A credit note embodies a downward adjustment of any kind associated with an earlier supply that was permitted under the GST law.

The 2026 amendment clarifies the role of a GST credit note in the context of post-supply discounts falling under Section 15(3)(b).

Businesses should therefore assess whether their commercial and GST credit-note process flows are sufficiently distinct.

A sales credit note issued solely for an internal commercial adjustment should not be treated as automatically having the same tax consequence as a GST credit note.

Businesses should check:

• Why the credit note is being issued,
• Whether the discount qualifies under Section 15, 
• Whether the credit note applies to an earlier transaction, 
• Whether the method chosen by the supplier is appropriate in relation to GST, 
• Whether the ITC status of the recipient has been taken into consideration, 
• Whether the credit note is appropriately recorded for GST purposes, and
• Whether the amended provision is applicable to the relevant period.

For businesses that make hundreds or thousands of such Adjustments, the manual process of going through all of them can be burdensome. A well-drafted GST review process can ensure that these sales adjustments, your accounting records, and tax treatments are in sync.

What Has Changed in GST Refunds Under Section 54?

The refund amendments have nothing to do with the changes introduced in the post-supply discounts. They relate to another aspect of the GST cycle.

Provisional Refund for Specified Unutilized ITC

The addition to section 54(6) refers to unutilized ITC allowed under the inverted-duty provision contained in section 54(3).

In sectors where the input GST rate exceeds the output tax rate, the accumulation of ITC could affect businesses' working capital. The refund facility becomes critically important, as otherwise the credit would remain trapped in the books of account as an electronic credit ledger.

The amendment to the law extends the provisional refund facility to the specified category.

However, businesses should not expect that:

• Any ITC balance can be claimed,
• all the accumulated credit would be eligible for refund,
• all claims would be approved,
• Approval for provisional refund would negate final verification, or
• regular documentation requirements would not apply.

The eligibility criteria cannot be ignored.

Export Refunds Below the Existing Minimum Limit

The reform to Section 54(14) addresses an entirely different issue. The existing law provides for a ₹1,000 minimum threshold for refunds under the aforesaid subsections. The new exception refers to the refund of tax in cases of export of goods from India with payment of tax.

Once it becomes effective, a qualifying refund in this category will not be barred simply because it does not meet the ₹1,000 benchmark.

Again, a close reading of the language is required. It is not a general exemption for all GST refunds pertaining to exports.

When Will the Maharashtra GST Amendment Act, 2026 Become Effective?

This is one of the most critical aspects of the Act, as a specific commencement date cannot be found in the substantive amendments.

Section 1(2) empowers the State Government to notify the commencement of the Act by way of notification in the Official Gazette. It also provides for both prospective and retrospective commencement and allows different commencement dates for different provisions. That means three dates should not be confused:

Act publication date: 7 July 2026

Commencement date: to be appointed through notification

Transaction period affected: will depend on the notified commencement and its stated effect

Can the Amendment Be Given Retrospective Effect?

Yes, the Act does give the power to the State Government. However, the mere grant of power to notify a retrospective date does not imply that every amendment made shall be deemed retrospective. Businesses should examine the actual notification to determine whether to apply the provision to prior tax periods.

Can Sections 15, 34 and 54 Start on Different Dates?

Yes.

The State Government may appoint different dates for different provisions.

A business should therefore avoid making a blanket statement such as "the Maharashtra GST Amendment Act became effective on X date" unless the notification supports that position for all relevant sections.

The correct compliance approach is to check the commencement of each provision relied upon.

Maharashtra GST Amendment 2026: Old vs New Position

The table below indicates that the change introduced by the 2026 legislation goes well beyond mere amendment of the wording of the law. With regard to discounts, the very structure of the statutory test has been altered, whereas for refunds, the scope of application of existing provisions has been extended or modified.

Which Businesses Are Likely to Be Most Affected?

The Amendment Act is not restricted to one particular industry. Its scope of application is rather determined by the nature of the transactions a business is engaged in.

Suppliers Who Grant Post-Supply Discounts

Businesses that regularly grant dealer discounts, turnover bonuses, rebates or other post-supply price reductions should consider reviewing the procedures for such transactions.

This review should include both the commercial documentation and the GST treatment of the said transactions.

Recipients Claiming Input Tax Credit

A recipient may be affected because the amended discount provision expressly refers to the reversal of ITC attributable to the discount.

Recipient businesses should therefore have a procedure to identify credit notes of ITC consequence.

Businesses With Inverted Duty Accumulation

Manufacturers and other registered persons facing eligible ITC accumulation due to the inverted tax structure may have to reconsider the amendment to Section 54(6).

The amendment may have implications for how qualifying refund claims are processed within the provisional refund regime.

Exporters of Goods Paying Tax on Export

The amendment to Section 54(14) is especially applicable to taxpayers claiming a refund of tax on goods exported from India with tax paid.

Its application should be judged in the context of the precise refund category, not the broader category of exports.

What Will Be the Practical Impact on Businesses?

The amendment can touch several internal processes at the same time.

Effect on Discount Policies

A business may have a legitimate commercial motive to give a discount. However, it does not address the GST issue. Tax teams must have visibility of the post-supply discount scheme before the corresponding tax adjustment is booked.

Effects on the Accounting System

The accounting chain should allow you to recognize:

• The initial supply,
• The subsequent discount,
• The credit note,
• The GST element,
• The recipient,
• and the related ITC process, where applicable.

The situation is especially serious in case of bulk transaction processing.

Effect on GST Reconciliation Process

When the amended Section 15(3)(b) comes into play, the supplier's correction and the recipient's ITC process are no longer separate processes.

Effect on Working Capital

The amendment to Section 54(6) could provide a commercial benefit to taxpayers who have eligible and unutilized input tax credits under an inverted duty regime.

The establishment of a provisional refund regime will affect the period during which qualifying credit amounts are blocked. Still, taxpayers should refrain from considering cash flow implications until the availability and commencement date have been confirmed.

How Will Finance, Accounts, Sales and GST Teams Be Affected?

Finance Team

Finance teams should identify discount arrangements that will have a tax impact rather than assuming every post-sale adjustment is a commercial matter. They may also need to revise expected cash flows if inverted-duty refunds constitute a significant element of working capital.

Accounts Team

The accounts team is typically responsible for issuing and recording credit notes and adjustments. This should be captured in their records notwithstanding the fact that the amended statutory provision does not capture the connection between the original transaction and the later adjustment.

GST & Tax Team

The GST team should consider:

• Section 15 application,
• GST credit notes,
• ITC recipient adjustment,
• recipient/supplier agreement,
• return filing treatment,
• inverted duty refund application,
• export refund characterization, and
• commencement notification.

Where the volume is large, businesses may consider a GST compliance consultant or structured indirect tax compliance services to review the position before changing tax treatment.

Sales and Commercial Team

Sales teams may negotiate discounts but don't always factor in GST. A bare minimum internal communication process avoids a scenario in which a discount is approved commercially. Still, it arrives posthaste on the tax team's desk after the credit note.

GST Compliance Checklist for Businesses

Key GST Compliance Risks Businesses Should Avoid

Applying the Amendment From the Publication Date Without Checking

The Act was published on 7 July 2026. However, this shall not be considered to give effect to every provision.

Treating Every Post-Sale Discount the Same

The various trade discounts may give rise to different GST implications, and hence each arrangement must be examined under the appropriate provision.

Issuing the Credit Note but Ignoring Recipient ITC

In relation to the amended Section 15(3)(b), the recipient's attributable ITC is part of the statutory requirements.

Poor Supplier-Recipient Reconciliation

It is possible that the supplier may assert one GST position whereas the recipient's records reflect another position. Such a position should be reconciled before it becomes part of a return or adjustment.

Assuming All Inverted Duty Refunds Automatically Get Provisional Payment

The amendment enlarges the statutory scheme. It makes no change to eligibility criteria, protection, or verification.

Applying the Export Exception to Every Export Refund

Section 54(14) specifically refers to the refund of tax on goods exported from India with payment of tax. The wording should not be stretched beyond that category.

Is the Maharashtra GST Amendment a Simplification or an Additional Compliance Burden?

There are arguments on both sides.

Where the Amendment May Make Things Easier

The revised Section 15(3)(b) does not repeat the earlier express requirement that the post-supply discount must be established through an agreement entered into at or before supply and specifically linked to invoices.

Instead, the provision now focuses on the credit note and the recipient's ITC reversal.

So, for businesses that have found the previous agreement condition a difficult hurdle to clear in order to effect genuine later commercial adjustments, the new wording may constitute a more viable format once it becomes effective.

Section 34 also becomes more understandable as it clearly acknowledges that such a discount is a basis for issuing the credit note.

The modification of Section 54 would also benefit the claimants eligible for inverted-duty under the said refund category.

Where Businesses May Have More Work

The revised framework still requires coordination.

The treatment of a supplier may turn on exactly what the recipient does with the associated ITC. Larger businesses with a significant distribution, dealer or customer network may require enhanced confirmation and reconciliation processes accordingly.

The operation of ERP systems may need to be reviewed, as a system designed around the former Section 15 conditions may not automatically satisfy the amended provision.

Finally, businesses must pay particular attention to commencement, as different amendments may be scheduled to take effect on different dates.

A Practical View

It is not just about decreasing or increasing compliance. It is about changing the locus of compliance.

While under the earlier formulation of Section 15, the pre-supply agreement and invoice connection were explicitly important, under the new language, the credit note and reversal of recipient ITC become important.

This creates the potential to simplify the legal formulation in one area while entailing transaction-level coordination in another.

What Should Businesses Do Next?

Businesses affected by the amendment can begin preparations without implementing provisions that do not yet apply.

Step 1: Confirm the Applicable Commencement

Check the Government of Maharashtra notification about which clause would be applicable.

Step 2: Map Existing Discount Schemes

Categorize the discounts that are provided prior to supply and those that are decided after supply.

Step 3: Evaluate Controls Over GST Credit Notes

Ensure there are controls over individuals authorizing and preparing credit notes and their effect on GST.

Step 4: Coordinate ITC Reversal Information

If there is any reversal of ITC, arrange a system to get the necessary information.

Step 5: Examine existing Inverted Duty Claims

Companies that are able to accumulate ITC will need to assess how the amendment to section 54 will affect their refunding process.

Step 6: Segregate Export Refund Categories

Do not mix the refund of tax on goods exported with payment of tax with every other zero-rated or export-related claim.

Step 7: Review ERP and Accounting Logic

System changes should be made only after the legal applicability and internal process have been confirmed.

Step 8: Carry Out a GST Compliance Gap Review

In a high-transaction-volume scenario, a formal review can help identify mismatches between credit notes, ITC, and refunds before they become an issue in GST reporting.

How Can Corpseed Help Businesses With the Maharashtra GST Changes?

The amendment of GST Rules regarding discounts, credit notes, and ITC can span multiple departments within the business. Corpseed can assist at the right levels for businesses without treating all taxpayers and transactions the same way when it comes to GST compliance services.

1. GST Applicability Review

Corpseed can assist companies in determining which amendments are applicable to specific transactions and which provisions are not applicable. 

2. Post-Supply Discount Review 

Existing discount policies and transaction flows can be analyzed to determine the impact that the amended Section 15 is likely to have on their GST treatment. 

3. GST Credit Note Compliance Support 

The government can help organizations determine the tax treatment of the credit notes and any discrepancies between commercial adjustments and the GST records.

4. Input Tax Credit Compliance Services

Corpseed can help you understand the ITC treatment, the need for reversal and other reconciliations in connection with appropriate credit notes.

5. GST Compliance Gap Assessment

A more general review can help determine whether there is a consistent process for discounts, credit notes and ITC followed by finance, accounts and sales departments.

6. GST Refund Advisory Services

Businesses that apply for a GST refund may receive assistance in understanding which refund category they may be eligible for, the required documentation, and statutory conditions.

7. Inverted Duty Structure Refund Support

Businesses that find themselves having too much ITC eligibility because of the inverted duty structure may ask for help in examining their refund eligibility and requirements.

8. Export GST Advisory Support

Exporters may be offered assistance to understand the refund provisions that apply to their export transactions and whether the Section 54(14) change applies.

Businesses that don't know how the new provisions apply to them can seek professional GST advisory services to assess the situation before altering returns, credit notes, ITC, or refund claims.

Key Takeaways

The Maharashtra GST Amendment Act 2026 contains some amendments that will have an impact, but not directly on day-to-day business operations.

• This Act was published on 7 July 2026 under No. XXVII of 2026 of the State of Maharashtra.
• This Act seeks to amend Sections 15, 34 and 54 of the Maharashtra GST Act, 2017.
• The amendment of Section 15(3)(b) relates to relevant post-supply discounts.
• The new section relates to a credit note issued by a supplier and reversal of attributable ITC.
• Section 34(1) now expressly includes a discount referred to in Section 15(3)(b).
• Section 54(6) has been expanded to include specified unutilized ITC under the inverted-duty provision.
• Section 54(14) is amended to provide for the refund of tax on goods exported from India with payment of tax.
• Businesses should not assume that 7 July 2026 is automatically the effective date of every amendment.
• A separate notification can give provisions prospective or retrospective effect and can prescribe different dates for different provisions.

For business taxpayers, the primary focus should be on determining the commencement, identifying the transactions that will be affected, and ensuring that discount, credit note, ITC, or refund records are in order prior to changing the GST position.