DISCOUNTS Credit Notes

[BALAKRRISHNA PATNAIK]

My co. operating Super distributor set up, where in My Co. Invoices to the Super distributors also we some time ask to supply to selected supply in discounted rate. The price difference being claimed to us by super distributors.

My question is while settling of the price difference claim as a Mfg co. can we take GST on such price difference ?

please respond.

Thanks

Balakrrishna Patnaik

[Ganeshan Kalyani]

Yes, you can take GST benefit on the discount amount given by you. The condition is the buyer has to reverse the input tax credit claimed to the extent of credit note amount. Thanks.

[DR.MARIAPPAN GOVINDARAJAN]

I endorse the views of Shri Kalyani

[BALAKRRISHNA PATNAIK]

Thanks for the response by Mr.Ganeshnan.

Futher, i wanted to know the timelines for example my invoice quantity may be sold in parts in discounted rates within 5-6 month even some times. will give you here an example of said transaction.

my invoice datails Invoice nO. 123 dtd. 30th Mar 2018 for qty 100 on 10/- each

Out of which 20 qty may be approved to sale in 9/- on 1st sep 2018

10 qty may be approved to sale in 8/- on 15th oct 2018

Then in Nov-18 my distributor raises a claim on me to settle the diff. ( his purchase rate - his selling rate )

Please let me know the GST impact on this transaction.

Thanks & Best regards,

Balakrishna Patnaik

[DR.MARIAPPAN GOVINDARAJAN]

If there is an agreement between the parties regarding to discount then such discount may be given. No time limit is in law for this. Earlier is advisable.

[Ganeshan Kalyani]

Restriction on taking input tax credit on purchase invoice /debit note is given in section 16. However, the word credit note is not mentioned in it. Hence, I am also of the view that discount can be given in the timlines as mentioned in your query.

[Ganeshan Kalyani]

In view of section 34 which states as under :

(2) Any registered person who issues ²[one or more credit notes for supplies made in a financial year] in relation to a supply of goods or services or both shall declare the details of such credit note in the return for the month during which such credit note has been issued but not later than September following the end of the financial year in which such supply was made, or the date of furnishing of the relevant annual return, whichever is earlier, and the tax liability shall be adjusted in such manner as may be prescribed:

Provided that no reduction in output tax liability of the supplier shall be permitted, if the incidence of tax and interest on such supply has been passed on to any other person.

In view of the above clause, the discounts given after September month of subsequent year of sale the GST credit on that discount component would not be allowed. However, if credit note to be raised for discount without giving impact of GST then there no time limit. Thanks.

AI Summary

GST on post sale discounts: credit note timing controls output tax adjustment and input tax credit reversal.
Where a supplier issues a credit note to reflect post sale discounts, the supplier may adjust its output tax and the purchaser must reverse the corresponding input tax credit; however, a credit note must be declared in the return for its month of issue and not later than the statutory cut off following the financial year of supply, and credit notes issued after that cut off cannot reduce output tax or generate input tax credit unless no GST impact is recorded.