The Central Board of Indirect Taxes and Customs (CBIC) has issued notifications on 7th March 2019 under GST Laws to implement the recommendation of the GST Council and has also issued a circular clarifying issues involving various natures of discounts.

The summary of notification have been given in a tabular manner for easy understanding:

1. GST – Central Tax Notification:

S. No Notification No Summary of the Notification
1. Notification No. 10/2019-Central Tax To grant exemption from requirement of registration for any person who is engaged in exclusive supply of goods and whose aggregate turnover in the financial year does not exceed Rs 40 lakhs. This exemption shall not apply to following persons –

(a) Any person liable to obtain compulsory registration U/s 24of the CGST Act, 2017;

(b) Persons engaged in making supply of Ice-cream and other edible Ice, Pan Masala and Tobacco and its substitutes

(c) Persons making Intra-State supply in the States (for list of States please refer to the Notification)

(d) Persons exercising option u/s 25(3), or any persons intending to continue such registration

2. Notification No. 11/2019 – Central Tax Government has notified the time limit for furnishing of Return for Outward Supplies in Form GSTR-1 for taxpayers having an aggregate turnover upto Rs. 1.5 crores for the months of April, May and June, 2019 shall be 31st July 2019
3. Notification No. 12/2019 – Central Tax Government has notified the time limit for furnishing of Return for Outward Supplies in Form GSTR-1 for taxpayers having an aggregate turnover exceeding Rs. 1.5 crores for the months of April, May and June, 2019 shall be the 11th day of the month succeeding such month.
4. Notification No. 13/2019 – Central Tax Government has notified the time limit for furnishing of Return in Form GSTR 3B on or before 20th day of the month succeeding such month. The date for payment of taxes for discharge of tax liability shall also be the last date of furnishing return in Form 3B i.e. 20th day of the month succeeding such month.
5. Notification No. 14/2019 – Central Tax Enhanced the threshold of taxpayers having aggregate turnover for availing Composition Scheme u/s 10 of the CGST Act, 2017 to Rs. 1.5 crores in the preceding Financial Year except for the States of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Uttarakhand. For these States the threshold for opting for composition scheme shall be Rs 75 lakhs.

 Note: The aforesaid notifications shall come into effect from 01st of April 2019.

2. GST Circular: 

S. No Circular No Summary of Circular
1. 92/11/2019-GST There has been several doubts in the Industry on sales promotion schemes as well as samples and gifts distributed. There has been industry practice to provide Post sales discounts which was not known at the time of sale.  

CBIC has issued a clarification on the aforesaid issues related to treatment of sales promotion schemes –

A. Free Samples and gifts:

it is clarified that samples which are supplied free of cost, without any consideration, do not qualify as “supply” under GST, except where the activity falls within the ambit of Schedule I of the said Act.

ITC shall not be available on Inputs, Input Services and Capital Goods in respect of goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples. ITC so availed shall have to be reversed as per Sec 17(5)(h) of the CGST Act, 2017

Where the activity of distribution of gifts or free samples falls within the scope of “supply” as per Schedule I of the Act, the supplier would be eligible to avail of the ITC.

B. Buy one get one free offer:

It is prevalent in FMCG, Pharma and some industry to offer such schemes of providing free quantities along with taxable supplies. Many companies offer either Buy one, Get one Free offer or provide free item along with the product.

CBIC has clarified that in the aforesaid cases, the items are not offered free of cost but single price is charged for all the goods.

Such supplies may not be treated as an individual supply of free goods but a case of two or more individual supplies where a single price is being charged for the entire supply.

Taxability of such supply will be dependent upon as to whether the supply is a composite supply or a mixed supply. In case of composite supply, same shall be taxed at the rate charged for principal supply. However, in case of mixed supply, all the goods shall be taxed at the rate of the product which attracts highest rate of tax.

ITC shall be available on inputs, input services and capital goods to the supplier for such offers.

C. Discounts including ‘Buy more, save more’ offers:

It is Industry practice to offer more discount with the increase as volume, sometimes termed as “Quantity discount”, “Volume Discount” or “Lifting Discount”, etc. Such discounts are passed on by the supplier through credit notes.

Such discounts offered by the suppliers to customers (including staggered discount under “Buy more, save more” scheme and post supply / volume discounts established before or at the time of supply) shall be excluded to determine the value of supply provided that conditions as laid down in Section 15(3) of the CGST Act, 2017 is satisfied including reversal of ITC by the recipient.

D. Secondary Discounts:

In some cases discounts are not known at the time of supply or are offered post such supply is over.

Section 34(1) – Credit or Debit Notes – where post issuance of tax invoice, taxable value or tax payable has exceeded the taxable value or tax charged in that invoice or goods are returned or supply is deficient, the registered person may issue a credit note to the recipient for supplies made in financial year.

Further, it is clarified that such secondary discounts shall not be excluded while determining the value of supply as such discounts are not known at the time of supply.

This shall not impact any input tax credit availability in the hands of supplier provided conditions laid down in Section 15(3) (b) of the CGST Act, 2017

Note – This is for information only. For exact details of changes, the notification/Circular may please be referred to, as and when they are issued.

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3 Comments

  1. ATUL SHAH says:

    In case of secondary discount it is clarified that the supplier will not be able to avail ITC on such discounts but the circular is silent on what is the effect on recipient. Please clarify the situation of recipient.

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