TaxTMI 
TaxTMI 
TaxTMI 
under below scenario . what is the right way of being tax compliant. PURCHASE PRICE AS PER INVOICE | ||
basic | 1260 | |
input gst ( cgst + sgst ) | 352.8 | (a) |
TOTAL PRICE WITH GST | 1613 | (b) |
CREDIT NOTES PERTAINING TO PURCHASE | ||
cd @ 3% | 48.39 | |
quarterly discount @ rs. 20 per fan | 20 | |
quarterly growth discount ( variable ) | 18.9 | |
annual growth discount ( variable ) | 18.9 | |
free fan scheme . on 48 fans 1 fan free | 33 | |
total discounts on product | 139.19 | (c) |
Actual purchase cost including GST | 1473.81 | cp = (b-c) |
SELLING PRICE INCLUDING GST | 1565 | (d) |
selling price basic | 1222.65625 | |
output gst ( cgst + sgst ) | 342.34375 | (e) |
NETT CONTRIBUTION TO GST PER PRODUCT SALE | ||
output gst - input gst | -10.45625 | (e-a) |
ACTUAL GROSS MARGIN | 6.18% | (d-cp)/cp*100 |
Points to be noted in the above scenario : - The nett contribution to output get payable per sale of the product is negative, yet the gross margin per product as per balance sheet is 6.18% as all cn is accounted for - Input gst carry forward continues to increase for every product sale which may be offset against other product sale. - Input gst is not reversed as credit notes are issued without gst and cost of availing input credit has been paid to the Seller and is in-turn received by the government. | ||
If the selling price is lesser that cost price due to Credit notes. Credit notes are issued without GST component by the seller
chetan jhaver
Handling Negative GST Contribution: Navigating Credit Notes and Input GST Carry Forward Under GST Rules In a discussion about tax compliance under GST, a scenario is presented where the selling price is lower than the cost price due to credit notes issued without GST. The purchase price, including GST, is 1613, with various discounts reducing it to 1473.81. The selling price, including GST, is 1565, resulting in a negative net GST contribution per product sale of -10.45625. Despite this, the gross margin is 6.18%. It is noted that input GST carry forward increases with each sale and is not reversed, as credit notes exclude GST. The query seeks guidance on handling this situation. (AI Summary)