Cash discount & Turnover discount

[Chhatra Jain]

There is no agreement between supplier ABC Ltd. & recipient for cash discount but as and when funds are required direly by ABC LTD it allows cash discount and issues credit note for the cash discount plus GST. Is GST required to be reversed for this occasional cash discount . Allowing cash discount is not a regular phenomenon. Also what will be the position in case of Turnover discount allowed six monthly.by ABC Ltd. In this case ABC Ltd should issue credit note for the discount amount plus GST.

AI Summary

GST on Discounts: No Reversal Needed for Cash Discounts Without Prior Agreement, Must Reflect in Invoice if Pre-Agreed. A discussion on the application of GST to cash and turnover discounts was initiated by a participant questioning whether GST should be reversed for occasional cash discounts provided by ABC Ltd. without a prior agreement. Responses indicated that GST is not required on discounts shown in the invoice, but if provided later, GST is not deductible unless agreed upon beforehand. If discounts are agreed upon before the supply, they should be reflected in the invoice, and GST should be calculated net of the discount. Section 15(3)(b) was referenced regarding post-sale discounts established by agreement.