Can we reverse the out put tax liability when issuing cash discount?

[RameshBabu Kari]

Q1- Can we reverse the out put tax liability when issuing cash discount?

Q2- Can we reverse the output tax liability when issuing credit note?

[KASTURI SETHI]

Not required as discount is allowed from transaction value subject to conditions laid down in Section 15 of CGST Act.

[Rajagopalan Ranganathan]

Sir,

Please refer to Section 34 of CGST ACT, 2017 and rule 53 of CGST rules, 2017.

[Himansu Sekhar]

If you issue the credit note, the liability will be reduced only if the receiver reverses the proportionate credit. Discounts before sale I.e when it is known before supply will not be subject to gst. Kasturi sir and ranganathan sir given the correct view.

AI Summary

Guidance on GST tax liability reversal for discounts; check Section 15, Section 34, and Rule 53 for compliance. A query was raised about reversing output tax liability when issuing cash discounts or credit notes under the Goods and Services Tax (GST) framework. One response indicated that discounts can be deducted from the transaction value if conditions in Section 15 of the CGST Act are met. Another response advised consulting Section 34 of the CGST Act and Rule 53 of the CGST Rules. A third response clarified that issuing a credit note reduces liability only if the receiver reverses the proportionate credit, and discounts known before supply are not subject to GST.