GST 2.0 April 2026 Aadhaar Mandate and ITC Block Changes

The phrase "GST 2.0" is used for the rate rationalisation recommended at the 56th GST Council meeting, which took effect on 22 September 2025: most goods and services now fall in the 5% and 18% slabs, with a 40% slab for a small list of goods, and the old 12% and 28% slabs were removed.

Around April 2026 a separate set of legal and procedural changes landed, mostly through the Finance Act, 2026 (Act 4 of 2026, dated 30 March 2026). Some are in force and some are still waiting for a notification. Several claims circulating online, including a "hard ITC block" and a "Green Track" for exporters, do not match any notified rule. This guide separates what is law today from what is pending.

1. Aadhaar Authentication for Refunds and Revocation

Aadhaar authentication for refunds is not new in 2026. Rule 10B of the CGST Rules was inserted by Notification 35/2021-CT and has applied since 1 January 2022 (Notification 38/2021-CT). A registered person must complete Aadhaar authentication to be eligible for:

• Filing a refund application in Form RFD-01 under Rule 89
• A refund of IGST paid on goods exported out of India under Rule 96
• Filing an application for revocation of cancellation of registration in Form REG-21 under Rule 23

Whose Aadhaar Is Authenticated

The rule requires authentication of the Aadhaar number of the proprietor (proprietorship), any partner (partnership firm), the karta (HUF), the Managing Director or any whole-time director (company), any member of the managing committee (AOP, BOI or society) or the trustee (trust), and of the authorised signatory. Persons notified under Section 25(6D) are exempt.

How to Complete It

Aadhaar authentication is done on the GST portal after login, using an OTP sent to the mobile number linked with the Aadhaar of each person being authenticated. Complete it before you prepare a refund or revocation application, so the filing is not held up.

If a Person Has No Aadhaar Number

The first proviso to Rule 10B lets a person who has not been assigned an Aadhaar number furnish the Aadhaar Enrolment ID slip together with one of: a bank passbook with photograph, a voter ID, a passport or a driving licence. That person must then complete Aadhaar authentication within 30 days of the Aadhaar number being allotted.

2. The "Hard ITC Block": What Is Actually Enforced

Some posts claim that from April 2026 the GST portal rejects a GSTR-3B if the ITC claimed exceeds GSTR-2B. We found no GSTN advisory, CBIC notification or GST Council decision that introduces such a block. What is actually in force:

• GSTR-3B Table 3 (outward liability) is locked. From the July 2025 tax period, the liability auto-populated from GSTR-1, GSTR-1A or IFF cannot be edited in GSTR-3B (GSTN Advisory, 7 June 2025). Corrections go through GSTR-1A before GSTR-3B is filed. Table 3.2 (inter-state supplies to unregistered persons and others) became non-editable from the November 2025 period.
• Table 4 ITC is not locked. ITC auto-populated from GSTR-2B remains editable in GSTR-3B.
• DRC-01C (Rule 88D). Where ITC claimed in GSTR-3B exceeds ITC available in GSTR-2B by more than the limit set on the portal, you receive an intimation in DRC-01C and must pay the excess or explain the difference in Part B. This is an intimation after filing, not a rejection of GSTR-3B.
• Interest on wrongly availed and utilised ITC is 18% under Section 50(3).

What to Do

• Review GSTR-2B when it is generated on the 14th, and act on invoices in IMS before you file GSTR-3B
• Reconcile the ITC in your books with GSTR-2B every month
• Keep working papers for any ITC you claim that is not in GSTR-2B, so you can answer a DRC-01C intimation

3. Intermediary Services: Place of Supply Now Follows Section 13(2)

This is the change that matters most for Indian businesses acting for foreign clients.

What Changed

An "intermediary" under Section 2(13) of the IGST Act is a broker, an agent or any other person who arranges or facilitates the supply of goods, services or securities between two or more persons, but not a person who supplies them on his own account.

Until March 2026, Section 13(8)(b) of the IGST Act fixed the place of supply of intermediary services at the location of the supplier. An Indian intermediary acting for a foreign principal therefore had its place of supply in India, and the service could not qualify as an export, so GST was payable as on a domestic supply.

Section 157 of the Finance Act, 2026 omitted Section 13(8)(b). The place of supply of intermediary services is now decided under the default rule in Section 13(2): the location of the recipient. The Finance Bill, 2026 did not defer this clause to a notified date (only the CGST amendments to Sections 15, 34 and 54 were deferred), and CBIC's text of the IGST Act shows clause (b) as omitted by the Finance Act, 2026 dated 30 March 2026. Confirm the date that applies to your invoices with your adviser.

IT and BPO firms that acted for foreign principals should read our detailed note on the intermediary services repeal and zero-rated exports, which also covers the RCM on foreign agents and the LUT steps.

When It Is an Export

A supply to a foreign client is an export of services only if all five conditions in Section 2(6) of the IGST Act are met:

• The supplier is located in India
• The recipient is located outside India
• The place of supply is outside India
• Payment is received in convertible foreign exchange, or in Indian rupees where permitted by the RBI
• The supplier and recipient are not merely establishments of a distinct person under Explanation 1 to Section 8

If they are met, the supply is zero-rated. You can supply under an LUT without paying IGST and claim a refund of unutilised ITC, or pay IGST and claim a refund of that IGST.

Who Benefits

The change helps businesses that genuinely act as intermediaries for foreign principals: commission agents, sourcing and buying agents, marketing or sales agents, and brokers facilitating supplies for overseas clients. IT, BPO or consulting firms that supply services on their own account were never intermediaries, so their export status is decided as before.

What to Do

1. Review agreements with foreign clients and identify services where you arrange or facilitate a supply rather than provide it yourself
2. Check each such service against the five export conditions above
3. File or confirm your LUT (Form RFD-11) for FY 2026-27 if you want to export without paying IGST
4. Claim refunds of unutilised ITC on zero-rated supplies in Form RFD-01, after completing Aadhaar authentication
5. Report these supplies as exports in GSTR-1

4. Post-Sale Discounts and ITC Reversal

The Law Today

Under Section 15(3)(b) of the CGST Act, a discount given after the supply is excluded from the value only if it is established in terms of an agreement entered into at or before the supply and specifically linked to the relevant invoices, and the recipient reverses the ITC attributable to the discount.

From 1 October 2025, the proviso to Section 34(2) also says the supplier cannot reduce its output tax on a credit note unless the registered recipient has reversed the ITC attributable to that credit note, if availed. Circular 212/6/2024-GST, which had prescribed CA or CMA certificates as evidence of reversal, was withdrawn by Circular 253/10/2025-GST.

What the Finance Act, 2026 Changes, Once Notified

Section 153 of the Finance Act, 2026 substitutes Section 15(3)(b) so that a post-sale discount is excluded when a credit note is issued and the recipient reverses the ITC under Section 34, dropping the prior-agreement condition. Section 154 adds such discounts to the cases in which a credit note can be issued under Section 34(1). CBIC's Act text shows both as "yet to be notified", so they are not in force yet.

How the Reversal Works

If you bought goods for Rs 1,00,000 plus Rs 18,000 GST and claimed the full ITC, and the supplier later issues a GST credit note reducing the taxable value by Rs 10,000 and the GST by Rs 1,800, you reduce your ITC by Rs 1,800.

• The credit note appears in IMS. Accepting it, or taking no action (deemed acceptance), reduces the ITC in your GSTR-2B for that period.
• From the October 2025 period, a credit note can be kept pending in IMS for only one tax period.
• A financial or commercial credit note without GST does not change your ITC.

What to Do

• Record supplier credit notes in your books as they arrive
• Act on credit notes in IMS before filing GSTR-3B
• Make sure GSTR-3B reflects the reduced ITC
• Link each credit note to the original invoice

5. Faster Provisional Refunds for Exporters

There is no notified "Green Track" category in GST law. The actual change is in Rule 91(2) of the CGST Rules, substituted by Notification 13/2025-CT with effect from 1 October 2025:

• For refunds of zero-rated supplies, Section 54(6) allows 90% of the amount claimed to be refunded on a provisional basis
• The proper officer issues the provisional refund order in Form RFD-04 within 7 days of the acknowledgement, based on the system's identification and evaluation of risk
• The officer can refuse the provisional refund for reasons recorded in writing and move to a final order under Rule 92
• Under Rule 91(1), provisional refund is not available if the applicant was prosecuted in the preceding five years for an offence involving tax evasion above Rs 250 lakh
• The balance is settled by the final order under Section 54(5) after verification

Pending: Inverted Duty Refunds and Small Export Refunds

Section 155 of the Finance Act, 2026 amends Section 54(6) to extend provisional refund to refunds of unutilised ITC under an inverted duty structure, and amends Section 54(14) so that the Rs 1,000 minimum does not apply to refunds of tax paid on goods exported. CBIC's Act text shows these as "yet to be notified".

What to Do

• Complete Aadhaar authentication before filing RFD-01
• File returns on time and keep GSTR-1 export details consistent with shipping bills and invoices
• File refund claims promptly after the relevant tax period

Summary: What Is in Force and What Is Pending

Let Tax Garden Navigate These GST Changes for You

These changes touch refunds, credit notes and export invoicing. Tax Garden's Compliance Standard plan covers GST return filing, monthly ITC reconciliation with GSTR-2B and IMS, and export refund applications.

Sources: CGST Rules 10B, 91 and 96A, CGST Act Sections 15, 34 and 54, and IGST Act Sections 2 and 13 as published on taxinformation.cbic.gov.in with amendment notes; Finance Bill, 2026 and its Memorandum (indiabudget.gov.in); Notifications 35/2021-CT, 38/2021-CT and 13/2025-CT; GSTN advisories on the GSTR-3B liability lock and IMS. Last reviewed September 2026.

Frequently Asked Questions

Who needs Aadhaar authentication to file a GST refund claim?

Under Rule 10B of the CGST Rules, in force since 1 January 2022, Aadhaar authentication is required before filing a refund application in RFD-01, a revocation application in REG-21, or getting an IGST refund on exported goods under Rule 96. It covers the proprietor, a partner, the karta, the Managing Director or a whole-time director, as the case may be, and the authorised signatory. A person with no Aadhaar number can use the Aadhaar enrolment ID slip plus a photo ID and must authenticate within 30 days of getting Aadhaar.

Do I have to reverse ITC when my supplier gives a post-sale discount?

Only if the supplier issues a GST credit note under Section 34 that reduces the tax charged. Reduce your ITC in GSTR-3B for the period in which the credit note is reflected. From 1 October 2025, the supplier cannot reduce its output tax on the credit note unless you reverse that ITC. If the supplier issues a commercial or financial credit note without GST, your ITC on the original invoice stays unchanged.

How quickly do exporters get GST refunds?

For zero-rated supplies such as exports, Section 54(6) allows a provisional refund of 90% of the amount claimed. Under Rule 91(2), as substituted from 1 October 2025, the officer issues the provisional refund order within 7 days of acknowledging the application, based on the system's risk evaluation, and can refuse it with recorded reasons. Refunds of IGST paid on exported goods are processed through customs data under Rule 96 instead of RFD-01.

Do I need a fresh Letter of Undertaking for exports every year?

Yes. An LUT in Form RFD-11 is valid for one financial year, so exporters who supply without paying IGST must file a new LUT on the GST portal for FY 2026-27, ideally before the first export invoice of the year. Without a valid LUT, IGST must be paid on exports and later claimed as a refund.

What happens to an invoice in IMS if I take no action on it?

An invoice left without any action in the Invoice Management System is deemed accepted, so its ITC flows into your GSTR-2B generated on the 14th. If the invoice is wrong or the goods were not received, reject it or keep it pending. You can still act on it after the 14th and recompute GSTR-2B, as long as you do so before filing GSTR-3B for that period.