Turnover discount

[Vinayak Daga]

1. Discounts to be received on the basis of Turnover( Purchase ) from Seller on the basis of FY 23-24, it is on the basis of structural discounts as per purchase agreement, which is depends totally on purchase turnover and in some cases no agreement is present

2. Discounts to be received are in the form of Commercial Credit Notes without GST..(No GST is reversed).

3. What should be the treatment of Credit Notes described above in the books of Buyer/Purchaser?

a. Whether such received discount should reduce from purchase in trading account?

b. or it should be shown as indirect income?

Any other clarification will be briefed.

Thanks for your kind reply and participation.

AI Summary

Turnover-based discounts treated as commercial income, recorded as other income rather than netted against purchases.
Turnover-based discounts issued as commercial credit notes without GST adjustment are commercial adjustments and should be recorded by the buyer as other income or discounts received rather than netted against purchases, unless they are directly attributable to specific purchase invoices or require ITC reversal; maintain documentation and follow ICAI and Revised Schedule III guidance.