cash discount whether gst applicable

[Satbir singh wahi]

Sir

On realisation of sales, cash discount is given to customers. Whether GST is applicable on discount as expence.

[Rajagopalan Ranganathan]

Sir,

According to Section 15 (2) of CGST Act, 2017 "

The value of the supply shall not include any discount which is given––

(a) before or at the time of the supply if such discount has been duly recorded in the invoice issued in respect of such supply; and

(b) after the supply has been effected, if–

(i) such discount is established in terms of an agreement entered into at or before the time of such supply and specifically linked to relevant invoices; and

(ii) input tax credit as is attributable to the discount on the basis of document issued by the supplier has been reversed by the recipient of the supply.

 

[Satbir singh wahi]

Sir

Thanks for Reply

But please clarify , when we book discount as expence in books , whether gst on reverse charge u/s 9(4) will be applicable.

[KASTURI SETHI]

Not applicable.

[Satbir singh wahi]

Thks Sir

[DR.MARIAPPAN GOVINDARAJAN]

If discount is treated as expenditure, in my view it will attract GST. The views of the experts are solicited.

AI Summary

GST treatment of cash discounts: excluded if recorded in invoice or agreed and input tax credit reversed.
Under Section 15(2) of the CGST Act, the value of supply shall not include any discount given before or at the time of supply if duly recorded in the invoice, or any discount given after supply if it is established by an agreement linked to the invoice and the recipient has reversed the input tax credit attributable to the discount on the basis of supplier documents.