PRODUCT DISCOUNTS

[Asked by 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 and SUN]

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

VAT discount rules: discounted invoicing requires a pre-announced scheme or documentation to avoid tax authority queries.
A consignment agent acting as an added unit may issue Form F, but when instructed to sell at a discounted invoice value the declared sale value governs sales tax liability. Discounts are generally acceptable if given under a pre-announced scheme or supported by documentation; otherwise discrepancies between receipt and sale values can prompt tax authority queries and require justification.