GST on Post Sales Discount

[NISHANT SHAH]

Dear All Experts,

One of my client want to give turnover discount for financial year 2020-21. As such, there was not any pre-contract for giving such discount before any sales made.

Whether GST is leviable on such discount by giving credit note?

Note: Turnover Discount is given against each invoices raised to customer/recipient in 2020-21.

AI Summary

Post sales discount GST treatment: exclusion requires pre supply agreement, invoice linkage and reversal of input tax credit.
Under Section 15(3)(b), a post supply discount can be excluded from transaction value only if it is established by an agreement entered at or before the time of supply, specifically linked to relevant invoices, and the recipient reverses input tax credit attributable to the discount; absent these conditions the discount cannot be deducted and GST is leviable, although some administrative guidance and an advance ruling have permitted financial credit notes without GST when discounts were not known prior to supply.