Cash discount /Trade Discount

[MUNIRAJ SRINIVASAN]

Dear Sir,

My client has calculated Assessable after deducting cash discount of 3% whether it is allowable under the the valuation rule 4 of the act or after arriving duty amount we will give discount or before duty we have to calculate which is correct?

AI Summary

Cash discount deduction allowed when passed to buyer and established before removal, reducing assessable value.
Cash discount is allowable as a deduction from assessable value if actually passed on to the buyer, given under terms of sale or trade practice known before removal, and applicable in principal-to-principal transactions; case law treats cash discount as a cost of finance that should not form part of assessable value when legitimately available and evidenced prior to removal.