PRODUCT DISCOUNTS

[Guest]

Dear Sirs,

I am a consignment agent for a Hyderabad based company, they transfer stocks to my company and i issue Form F for that value, my clients will deposit cash in my companies account and susequently I transfer product to them, now my company wants to give discount for the products, (for example I receive products for ₹ 36/- and issue form F for the same value now company wants to give discount of ₹ 6/- and asking me to raise invoices for ₹ 30/- can I do this or not please help me.

Kind regards

[Ganeshan Kalyani]

In my view you can do it. In fact your location has been added as one of unit of the principal company. Therefore you are able to to issue Form F. Further sales tax is on sale value of the goods.

[YAGAY andSUN]

Dear Subramaniam,

We see some complications in this transaction as discount is allowed in VAT Laws/CST Laws when is given under the preannounced scheme. In this transaction you are getting the goods on INR 36 as a consignment agent and you are being asked to sell it on INR 30. It mean whenever return are being filed there would be a gap of INR 6. Department may ask question in this regard and seek justifications.

Regards,

YAGAY and SUN

(Management, Business & Indirect Tax Consultants)

AI Summary

Hyderabad-based company considers discounted invoicing; warnings issued on compliance with VAT/CST preannounced discount schemes. A consignment agent for a Hyderabad-based company inquires about issuing invoices at a discounted rate. The company transfers stock valued at 36, but now wants to offer a 6 discount, asking the agent to raise invoices for 30. One response suggests this is permissible, noting the agent's location is considered a unit of the principal company and sales tax applies to the sale value. Another response warns of potential complications, highlighting that discounts must align with preannounced schemes under VAT/CST laws, and discrepancies in returns could prompt inquiries from tax authorities.