Post facto discount rules and input tax credit: invoice-linked, pre-agreed discounts preserve credit; discretionary rebates may not.
Post facto discounts are excluded from the transaction value and thus reduce Input Tax Credit only if the discount is established in an agreement entered into at or before supply, specifically linked to the relevant invoice(s), and the ITC attributable to the discount is reversed by the recipient on supplier documentation; discounts that are contingent, discretionary, or not invoice-linked do not reduce the value of supply. The proviso tying ITC entitlement to payment within the prescribed period means that commercial credit notes alone may not preserve ITC if they do not effect payment of the value of supply as defined for valuation purposes. (AI Summary)