TRADE DISCOUNT

[Mahesh Dhanaboina]

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.

AI Summary

Trade discount: GST excluded if agreed, but input tax credit must be proportionately reversed; single CNs permitted.
Where a trade discount is agreed, GST is not leviable and the discount should be indicated on the invoice; however, GST law prevents dual benefit so Input Tax Credit must be proportionately reversed where discounts affect taxable value. An amendment permits issuance of a single credit note against multiple invoices, often applied on a FIFO basis, requiring appropriate ITC reversal and invoice disclosure.