GST ON TRADE DISCOUNT

[SAFETAB LIFESCIENCE]

Dear Experts,

We are giving post- sales Trade Discount to our customers. The GST rate is for our final products is 12% .

The customer receiving Trade Discount is instructing us to put GST 18% on Discount value and we have given Credit Note with 18% GST several times. We have reduced the Trade Discount Credit Note value in Taxable Sale Value and reduced the 18% GST value from the GST payable in GSTR-3B.

Please confirm the GST rate on Discount 18 % is correct or not. Our GST officials are telling it is wrong and we have to put GST only 12%.

Please clarify with documentary evidences / notification / GO details like that since our customers are MNC Indian company and they will ask evidences from us.

AI Summary

Trade discount GST must match the product's GST rate, so credit notes apply the same tax rate.
Post sale trade discounts can reduce taxable value if they are established by a pre supply agreement, linked to specific invoices, and the recipient reverses the input tax credit attributable to the discount; in such cases the credit note should carry the GST rate applicable to the underlying product and supplier output liability is adjusted on issuance of the credit note, with procedural guidance under the provisions enabling credit notes and adjustment of output liability.