GST applicability on primary & securities incentives income arise from commercial credit notes

[JIGAR SHAH]

Case :

Dealer purchase goods from the Manufacturer. On achievement of certain sales or fulfilling certain criteria manufacturer issued a commercial credit note to the Dealer as Primary & Securities Incentives.

Such commercial credit notes are issued without GST as per section 15(3)(b) Post supply discount, The Supplier, can issue a commercial credit note for the value of the discount. In such a scenario, the buyer will not be required to reverse any input tax credit.

Such commercial credit notes are issued without GST and dealer treat the same as Primary and securities incentives income as direct income. Manufacturer not claim any credit and dealer not made in credit reversal.

Issue :

Whether a dealer is required to charge GST on such Primary & Securities Incentives or is there any different treatment for Incentive income? Whether section 15(3) include discounts as well as incentives?

Kindly clarify the GST applicability on the above transaction.

AI Summary

Debate on GST for Sales Incentives: Section 15(3)(b) Discounts and Input Tax Credit Implications for Dealers A dealer purchases goods from a manufacturer and receives commercial credit notes as primary and securities incentives for achieving sales targets. These credit notes are issued without GST under section 15(3)(b) as post-supply discounts, meaning the dealer doesn't need to reverse input tax credit. The issue is whether GST should be charged on these incentives. One view suggests that incentives for purchase targets are not taxable, while sales-based incentives might be. Suggestions include clarifying credit note reasons, issuing tax invoices, or adjusting nomenclature to avoid future issues. Another perspective argues that such discounts should adjust sales value, not be treated as income.