Credit note

[AKHIL MITTAL]

ARP wants to give quantities discount to its dealers by issuing credit note, Can he do so with out affecting GST/ without reversing GST. If yes, will the income of other party attract GST

[KASTURI SETHI]

Yes, quantity discount can be given by issuing credit note. It is covered under Section 15(3) of CGST ACT, 2017. It is subject to the fulfillment of conditions laid down therein. It should be prior (or at the time of supply) known to the buyer. Also go through Flyer No.15 dated 1.1.18 issued by the Board. Invoice, agreement regarding discount plus books of accounts are supporting evidence and must be correlated.

Reversal of ITC on the value of discount is required.

[YAGAY and SUN]

Pre announced discount policy is required to substantiate such discounts etc. under GST regime otherwise tax benefit would not be available.

[DR.MARIAPPAN GOVINDARAJAN]

I endorse the views of Yagay and Sun

[AKHIL MITTAL]

THANKS FOR THE REPLY. THE DISCOUNT POLICY WAS DECIDED AT THE TIME OF SALE, BUT WE ARE MANUFACTURER OF FOOTWEAR & DON'T WANT TO REVERSE THE GST AS THE REFUND UNDER INVERTED DUTY STRUCTURE HAS ALREADY BEEN CLAIMED. CAN WE ISSUE CREDIT NOTES WITHOUT REVERSING GST PLEASE REPLY SPECIFICALLY.

[YAGAY and SUN]

Yes you can, but only if your customer do not revert the ITC.

AI Summary

Quantity discount via credit note permitted under GST if conditions and documentation met; input tax credit reversal may be required.
Quantity discounts may be given by issuing a credit note if statutory conditions for post supply value adjustments are met; the discount must be known to the buyer at or before supply or be covered by a pre announced discount policy, and must be supported by invoice, agreement and books of account. Reversal of the corresponding input tax credit is required unless the recipient does not reverse its claimed credit, in which case the supplier may issue credit notes without reversing GST, subject to documented evidence and coordination.