How to claim receipt of business promotion expenses to be filed as exemption under GST

[Guest]

We have received incentive on sales from our principles. Also, during final calculation, our principals debit from the sales achieved, the amount in proportion to the percentage of incentive received. ( Say, if 10 lakhs is the sales incentive ( over and above normal operating discounts), this amount will be reduced to the extent in the subsequent year. Our Auditors say that this payment credit received to our account is taxable under GST and we are liable to pay now. When we enquired with our principals, they said that, they have raised credit note and debit note for the same and GST not charged . But returns are filed by the principals under the provision of exemption which falls under 0 % GST as per system.

We were informed that, under GST, principles are entitled to GST exemption for sales promotional offers ..

Please clarify and confirm.

AI Summary

Business Seeks Clarification on GST Applicability for Incentives Adjusted Against Sales; Differing Opinions on Taxability A business is seeking clarification on whether incentives received from principals, which are adjusted against sales, are subject to GST. Their auditors believe the incentives are taxable, while the principals claim exemptions under a 0% GST provision. A respondent advises that the incentives are taxable as they constitute a service, and the liability to pay GST is on the agent, not the principal. Another suggests that if discounts and incentives are pre-agreed and documented in invoices, GST may not be applicable. A third respondent highlights conditions for issuing credit or debit notes.