TaxTMI 
TaxTMI 
What should be treatment of Turnover based discounts received (without GST as per Section 15(3)(b)) in Trading Account ?
Turnover Discount Treatment
20 Jun 2023 
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Turnover-based discount treatment: classification may determine whether discounts reduce purchases or attract taxation as income.
Treatment of turnover-based discounts issued as commercial credit notes without GST is questioned as to whether they should reduce purchases in the trading account or be shown as indirect income, since separate income presentation has attracted tax authority attempts to tax such amounts; the discounts are structural under purchase agreements and clear contractual drafting is emphasised to define their accounting and tax character. (AI Summary)
Treatment of turnover-based discounts issued as commercial credit notes without GST is questioned as to whether they should reduce purchases in the trading account or be shown as indirect income, since separate income presentation has attracted tax authority attempts to tax such amounts; the discounts are structural under purchase agreements and clear contractual drafting is emphasised to define their accounting and tax character. (AI Summary)