Price Difference received from supplier and shown as income in P&L, whether there is any GST liability on it.

[Sandeep Yadav]

XYZ. Ltd(supplier) has given price difference to ABC Ltd.(recipient) by issuing a non gst document, because as per Sec15 discount which has not been agreed at the time of supply cannot be reduced from the value of supply.( This is also clarified from advance ruling sought by UltraTech Cement.). Now ABC Ltd. has not reversed the ITC proportionate to price diff received from XYZ.Ltd. ABC Ltd. has shown the price diff as its income in P&L A/C. My questions are:

1. Is there any need to reverse ITC proportionate to price diff received?

2. Whether there is any GST liability on price diff shown as income in P&L? (If ITC has not been reversed)

AI Summary

GST on price difference: delinked financial credits may attract tax as independent supplies if no invoice adjustment is made.
If a supplier issues a price difference as a financial credit without reducing taxable value or issuing an invoice linked credit note, the adjustment is delinked from the original supply: the recipient need not reverse Input Tax Credit tied to that invoice but should treat the price difference as an independent receipt and discharge GST on it as a supply; conversely, if the price difference is a true discount or an invoice overcharge, purchase cost and ITC should be adjusted and statutory invoice adjustment provisions applied within the allowed timeframe.