Dear Professionals,
We are giving discount to our customers on attainment of Target Sales with us on Aggregate Basis.We are issuing credit notes charging GST towards such discount. But, Our customers are telling as per their Auditor's advice that gst will not applicable on such discount as it is not related to a single invoice.
In the similar manner, we are also receiving credit notes without charging gst from our suppliers on Target Discount.
We would like to know whether gst is applicable on such discount.
GST Applicability on Trade Discounts: Credit Notes for Multiple Invoices May Require ITC Reversal According to GST Law. A user inquired about the applicability of GST on trade discounts given to customers upon achieving target sales, where credit notes are issued with GST. The customer's auditor advised that GST isn't applicable as the discount isn't linked to a single invoice. A similar situation occurs with their suppliers. One response clarified that if there is an agreement on trade discounts, GST is not applicable and should be noted in the invoice. Another response argued that the customer's auditor's view contradicts GST law, which requires ITC reversal proportional to the discount, and supported the practice of issuing a single credit note for multiple invoices. (AI Summary)