IMPACT OF GST ON DISCOUNTS ALLOWED AFTER BILLS ISSUED

[ROHIT GOEL]

IN A CASE GOODS ARE PURCHASED FOR RS. 100 AND GST OF RS. 12 PAID TO SELLER. SUBSEQUENT TO THIS SELLER ISSUES AN ADDITIONAL DISCOUNT OF RS. 5/- AGAINST GOODS OF RS. 100/- BUT THE AMOUNT IS NOT REVERSED THROUGH DEBIT / CREDIT NOTES. SELLER SAYS THAT HE WILL NOT ISSUE ANY CREDIT NOTE AND THERE IS NO REQUIREMENT FOR US TO ISSUE DEBIT NOTE IMPLYING THAT GST OF RS. 12/- IS PAID TO GOVERNMENT TAKING TRANSACTION VALUE OF RS. 100/- INPLACE OF NET VALUE OF RS. 95/-.

IN SUCH A SCENARIO IF I DEBIT RS 100/- AS PURCHASE AND REDUCE DISCOUNT OF RS. 5/- FROM PURCHASES MAKING IT NET AT RS. 95/-. CAN I WILL BE ELIGIBLE FOR GST INPUT OF RS. 12/- OR IT WILL BE 12% OF RS. 95/- .

AI Summary

GST input tax credit may remain claimed when a post supply discount is not reflected by supplier credit note.
Where a supplier grants a post billing discount without issuing a credit note, the recipient's entitlement to Input Tax Credit depends on whether the discount was attributable at the time of supply under Section 15(3). If the supplier does not issue a credit note, the recipient may retain the full credit claimed on the original transaction; if the supplier later reduces output tax or claims refund, the recipient must debit or reverse any excess credit taken.