TaxTMI 
TaxTMI 
In an agreement instead of receiving 20% referral invoice which attracts GST @ 18% to the supplier who is engaged in restaurent services being sale of food and beverages attracting GST@5%. Since the 18% GST paid on this referral fees will become the cost to supplier, is it possible that insetead of apying GST 5% on Rs. 100, the supplier will pay GST on 80, treating 20 as the Trade discount as per the rules and provision Section 15(3) and CBIC circular.
GST query related to Section 15 (3) of CGST Act, 2017
24 Aug 2026 
3 Replies 
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Trade discount treatment under GST depends on genuine price reduction, not relabelling referral-service consideration in contracts.
GST valuation treatment of a trade discount depends on whether the payment is a genuine reduction in consideration for the restaurant supply or consideration for a separate referral service. A referral fee cannot be converted into a trade discount merely through contractual wording. Where a genuine price reduction is intended, the agreement, customer invoice, commercial documentation and accounting should consistently reflect that reduction. The payment flow, contractual obligations and nature of the underlying supply remain material to a substance-over-form and separate-supply assessment. (AI Summary)
GST valuation treatment of a trade discount depends on whether the payment is a genuine reduction in consideration for the restaurant supply or consideration for a separate referral service. A referral fee cannot be converted into a trade discount merely through contractual wording. Where a genuine price reduction is intended, the agreement, customer invoice, commercial documentation and accounting should consistently reflect that reduction. The payment flow, contractual obligations and nature of the underlying supply remain material to a substance-over-form and separate-supply assessment. (AI Summary)