CASH DISCOUNT/TRADE DISCOUNT, CREDIT NOTE / DEBIT NOTE

[SAFETAB LIFESCIENCE]

Dear Team,

What is the major difference from Cash Discount and Trade Discount. We are giving discount to our customers for making payment prior to agreed due date / credit periods. Discount is not worked on the basis of any percentage on the basic selling price. It is based on the number of days of payment made prior to the due dates. Whether we have to charge GST on the Discount amount. Whether we have to give Credit Note or we can get Debit Note from party or any one of the both can be used.

Whether, the issuance of Credit Note without GST is a mistake and leviable penalty under GST act. Because, some of our clients are asking Credit Note without GST and some of our clients are asking Credit Note with GST. The parties asking Credit Note with GST is giving their Debit Note also for the same transaction (i.e) the discount allowed by us. We are taking credit of ITC by using their Debit Note. Is it correct or not ??? (or) shall we have to reduce our GST liability by using our Credit Note declared in GSTR-1. Accounting wise, amount wise both are correct. But, as per GST act, which one is to be used.

Whether, The GST on Discount amount should be mentioned in Credit Note ?? Is it mandatory ???

AI Summary

Understanding GST: Cash vs. Trade Discounts, Credit Notes, and Reconciliation Issues Explored Under GST Regulations A forum discussion revolves around the differences between cash and trade discounts under GST regulations. A company offers discounts based on early payment, questioning if GST applies to these discounts and whether to issue credit or debit notes. Responses clarify that GST differentiates discounts based on timing-before, at, or after supply-and their inclusion in the invoice. Credit notes should detail tax values and must be issued by suppliers, not recipients. The discussion also addresses reconciliation issues in invoicing and the potential GST implications on discounts not linked to predefined agreements.