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.

[Himansu Sekhar]

If you will not reverse the credit, his lowering of value through credit notes is not allowed. Sec. 34 does not mandate your reversal, but it is linked with his reduction in tax.

[Himansu Sekhar]

Turnover discount and cash discount are given the same treatment under gst.

[Nash Industries I Pvt Ltd]

No GST on discounts if shown in the invoice. If the invoice does not reflect the discount but provided subsequently, gst is not deductible.

[DR.MARIAPPAN GOVINDARAJAN]

I endorse the views of Shri Ramasamy.

[Chhatra Jain]

Sir

What would be the position in case it is agreed between thé parties for cash discount and turnover discount before commencent of supplies?

[Nash Industries I Pvt Ltd]

if agreed before, then it is to be shown in the invoice and the GST is payable net of discount

[Himansu Sekhar]

Please refer to sec 15(3)(b) . it has been written that if the discount is effected after sale and established in terms of agreement ........... And ITC ..... Has been reversed then such value will not include such discount.

AI Summary

GST on discounts: pre invoiced discounts reduce taxable value; post supply discounts require credit notes and tax adjustment.
Cash and turnover discounts receive identical GST treatment: discounts agreed before supply and shown in the invoice reduce taxable value and GST payable; discounts given after supply must be evidenced and documented by credit notes and corresponding tax adjustments, and do not reduce taxable value unless properly established and documented.