The first set of this year's GST reforms takes effect on Sunday, 1 November 2026. CBIC notified it on 26 and 27 October. Most of it makes life easier for small businesses: discounts after a sale, faster refunds. One part adds work: if you buy scrap or waste, you may now pay GST under reverse charge and deduct TDS. Here is what changes, who it hits and what to do this week.
Key takeaway: From 1 Nov 2026: post-sale discounts by credit note (no prior agreement needed), 90% provisional refund for inverted duty, RCM on used cooking oil, plastic, tyre and e-waste scrap, TDS on scrap purchases, and 5% GST on retreaded tractor tyres.
Quick answers: GST from 1 November
What changes in GST from 1 November 2026?
Four things for most businesses: post-sale discounts can be given through a credit note without a prior agreement, inverted duty refunds get a 90% provisional refund, the ₹1,000 minimum no longer blocks refunds on goods exported with tax paid, and scrap and waste purchases come under reverse charge and TDS.
Which notification brings these changes?
Notification 03/2026–Central Tax dated 26 October 2026 brings Sections 153 to 155 of the Finance Act, 2026 into force on 1 November. Rate, RCM, registration and TDS changes come through notifications dated 27 October 2026.
Do I pay GST under reverse charge when I buy scrap?
Yes, from 1 November, if you are registered and buy used cooking oil, plastic scrap, tyre scrap or e-waste from an unregistered seller, you pay the GST yourself under RCM.
Has the GST rate changed on anything?
Retreaded tractor tyres move to 5% (2.5% CGST + 2.5% SGST). Other retreaded tyres stay at 18%. Psyllium seed (isabgol) becomes exempt.
Are the big GST reforms also from 1 November?
No. CBIC says only changes that do not need a law amendment start on 1 November. Changes that need the GST Acts amended are targeted for 1 April 2027.
The changes at a glance
| Change | Legal source | Who it affects |
|---|---|---|
| Post-supply discount: credit note is enough, recipient reverses ITC | Sec 15(3)(b) and 34, CGST Act (Sec 153–154, Finance Act 2026) | Wholesalers, distributors, FMCG trade |
| 90% provisional refund for inverted duty structure | Sec 54(6) (Sec 155(a)) | Makers whose input GST is higher than output GST |
| ₹1,000 minimum does not apply to export of goods with tax paid | Sec 54(14) (Sec 155(b)) | Small courier and postal exporters |
| RCM on used cooking oil, plastic, tyre and e-waste scrap | Notification 04/2026-CT (Rate) | Registered buyers of scrap from unregistered sellers |
| Scrap suppliers lose the registration exemption | Notification 06/2026-CT | Kabadi and scrap dealers |
| TDS on purchases of these scrap items | Notification 07/2026-CT | Registered buyers of scrap from registered sellers |
| Retreaded tractor tyres 5%; isabgol exempt | Notifications 02 and 03/2026-CT (Rate) | Tyre retreaders, agri traders |
1. Discounts after the sale: what is different
Until now, a discount given after the sale reduced the taxable value only if it was agreed before or at the time of supply and linked to specific invoices. Year-end schemes and target discounts often failed that test, so suppliers paid GST on money they never received.
From 1 November, the new Section 15(3)(b) needs just two things: the supplier issues a credit note, and the buyer reverses the input tax credit on that discount. Section 34 now covers these credit notes too.
| Example | Before 1 Nov | From 1 Nov |
|---|---|---|
| Sale ₹1,00,000 + 18% GST; ₹5,000 target discount later | GST stays on ₹1,00,000 unless the discount was agreed upfront | Credit note for ₹5,000 + ₹900 GST; buyer reverses ₹900 ITC |
2. Refunds get quicker
- Inverted duty: if your inputs carry 18% and your output 5%, the unused credit can now get a 90% provisional refund under Section 54(6), subject to risk checks. Earlier this was only for zero-rated supplies.
- Small exports: the ₹1,000 floor in Section 54(14) no longer applies to goods exported with payment of tax, so small courier and postal shipments can claim refunds.
3. Buying scrap? RCM and TDS now apply
| Item | HSN | From unregistered seller | From registered seller |
|---|---|---|---|
| Used cooking oil | 1518 | Buyer pays GST (RCM) | TDS by buyer |
| Plastic waste and scrap | 3915 | Buyer pays GST (RCM) | TDS by buyer |
| Tyre waste and scrap | 4004 | Buyer pays GST (RCM) | TDS by buyer |
| Electrical and electronic waste | 8549 | Buyer pays GST (RCM) | TDS by buyer |
| Metal scrap | Ch. 72–81 | RCM already applies since Oct 2024 | TDS by buyer |
The same notifications take these suppliers out of the registration exemption, so a kabadi or scrap dealer selling these items should check whether they now need a GSTIN. Buyers pay RCM GST in cash (not from credit) and can then claim it as input tax credit.
What is not changing yet
CBIC Member (GST) Sanjay Mangal said on 22 October that the reforms come in phases. Steps that need the CGST and SGST Acts amended are targeted for 1 April 2027. Reports also say drafts of new GSTR-1, GSTR-1A and IFF formats go on MyGov for comments until 30 November. These are drafts, not new forms.
Action plan for this week
- Pending year-end or target discounts? Plan to issue them as credit notes after 1 November and tell buyers to reverse ITC.
- Buy any of the scrap items above? Set up RCM entries and a self-invoice for purchases from unregistered sellers.
- Running an inverted duty business? Line up your next refund claim to use the 90% provisional route.
- Sell retreaded tractor tyres? Update the rate to 5% in your billing from 1 November.
Do it in DAM
- Open Search and type New Credit Note to issue a post-sale discount against the customer.
- Search Debit / Credit Notes to see every adjustment in one register.
- Record scrap purchases with New Purchase, then check RCM Register for the GST you owe in cash.
- Change the rate on a product from Add Product → GST Rate (%), and check GSTR-3B before filing.
Issue credit notes and track RCM in one app
Bill, adjust discounts and keep your RCM purchases ready for GSTR-3B.
Related: Debit note vs credit note and GSTR-1 and GSTR-3B filing guide.
Sources
Content checked on 28 October 2026. CBIC GST notifications · TaxGuru: Notification 03/2026-CT, Sections 153–155 Finance Act 2026 · CAclubindia: RCM, registration and TDS notifications from 1 Nov 2026 · People Matters: CBIC member on phased rollout · Goodreturns: draft GSTR-1 consultation. Hero photo: yasin hemmati on Unsplash (Unsplash License, cropped).
Disclaimer: This guide is for educational purposes only and does not constitute formal tax, legal or financial advice. Read the gazette notifications on the CBIC site for exact wording and conditions. Verify with a registered Chartered Accountant (CA) before acting.