GST on cash discount given through credit notes

[sunilkumar bhageria]

We are selling goods to our customer applying 18 % GST. IN some case party makes early payment of the bill hence cash discount is allowed through credit notes to such customer on without any GST (cash discount condition some time mentioned in PO some time not).Should we apply GST also on such cash discount at the time of issuance of C Note .

AI Summary

GST on Cash Discounts: Credit Notes Can Exclude GST If Discount Terms Are Pre-Documented and Input Tax Credit Is Reversed. A discussion on a forum addressed the issue of applying GST on cash discounts given through credit notes. The initial query questioned whether GST should be applied when issuing credit notes for early payment discounts. Responses highlighted that GST on discounts can be reduced from outward liability if the discount terms are documented in the purchase order or agreement. If not documented, the department might deny the discount. Credit notes without GST are permissible if conditions are met, such as the customer reversing input tax credit. The consensus was that issuing credit notes without GST does not result in revenue loss.