Discount can be classified in to 3 categories:
1. Post Sale Discount( Terms and conditions established on or before sales contract – Clarification Point No. 5 (Through Commercial Credit Note by Seller without GST)
2. Additional discount – For Additional activities such as Advertisement – Clarification Point No. 3 ( Through Tax Invoice by Dealer) – Added to dealer’s turnover to calculate GST
3. Additional discount – For secondary – consumer schemes – Incentive cum compensation for reduced price to dealer) Clarification point No. 4 (Through Tax Invoice by Dealer)- Added to dealer’s turnover to calculate GST
GST credit note can be passed only for the below mentioned transactions
1. Sales Return
2. Price Revision
All other claims in the form of reimbursement of Advt ( as per clarification point no3) and compensation of consumer schemes on account of reduction in prices for Para -5, can be routed through tax invoice raised by the dealer, except post sale discount passed through commercial credit notes.
1. Post Sale Discount – Clarification Point No.5
Process:
Treatment by Seller: If dealer eligible to get the discount, seller can raise Commercial Credit Note for Rs.1,00,500/-without disturbing the Output tax liability.
Treatment by Dealer: Dealer can avail input tax credit of Rs.6,03,000/- and No need to reverse the Input tax credit while accounting credit note of Seller
Example:
Invoice details of Seller
| Sl No | INV NO | DATE | Item | Qty | Rate | Value | GST | Total Invoice value | Eligible Incentive as per Trade Circular |
| 1 | W0018-20001 | 01/04/2019 | 1234 | 300 | 3350 | 1005000 | 180900 | 1185900 | 1,00, 500.00 |
| 2 | W0018-20020 | 20/04/2019 | 1234 | 700 | 3350 | 2345000 | 422100 | 2767100 | |
| 1000 | 3350000 | 603000 | 3953000 |
2. Additional discount – For Additional activities such as Advertisement – Clarification Point No.3
Process:
If the company proposes to give Additional discount of Rs.1,00,000 to carry out the additional activities such as Advertisement, then
Dealer: To issue the Tax invoice on the Discount value proposed by Seller Company with GST and the same need to be shown in their GSTR-1 which makes seller company hassle free to avail the Input tax credit under section 16
Seller: Seller company can avail the Input tax credit on the invoice raised by dealer on account of support services.
Invoice details of seller – Business support services( Advt)
| Sl No | INV NO | DATE | Item | Qty | Rate | Value | GST | Total Invoice value |
| 1 | ADV-1 | 0/04/2019 | BSS | 1 | 100000 | 100000 | 18000 | 118000 |
| 1 | 100000 | 18000 | 118000 |
3. Additional discount – For secondary – consumer schemes – Clarification point No.4
Process:
If the company proposes to give Additional discount of Rs.90,000/- towards consumer schemes against reduced sale to customer
Dealer: To issue the Tax invoice on the Discount value proposed by Seller Company with GST (refer Table 3)and the same need to be shown in their GSTR-1 which makes seller company hassle free to avail the Input tax credit under section 16
Seller: Seller company can avail the Input tax credit on the invoice (table 3) raised by dealer on account of support services.
| Invoice details of Seller (Table 1) | ||||||||||||||||
| Sl No | INV NO | DATE | Item | Qty | Rate | Value | GST | Total Invoice value | ||||||||
| 1 | W0018-20001 | 01/04/2019 | 1234 | 300 | 3350 | 1005000 | 180900 | 1185-900 | ||||||||
| Additional Discount (Table 2) | ||||||||||||||||
| Sl No | Original Inv Ref No | DATE | Item | Qty | Rate | Discount value | ||||||||||
| 1 | NA | NA | 1234 | 300 | 300 | 90000 | ||||||||||
| Invoice details of Dealer to Seller (Table 3) | ||||||||||||||||
| Sl No | INV NO | DATE | Item | Qty | Rate | Value | GST | Total Invoice value | ||||||||
| 1 | AD-con | 30/04/2019 | Incentive | 300 | 300 | 90000 | 16200 | 106200 | ||||||||
| Invoice details of Seller to the customer | ||||||||||||||||
| Sl No | INV NO | DATE | Item | Qty | Rate | Value | GST | Total Invoice value | ||||||||
| 1 | D-1 | 30/04/2019 | 1234 | 300 | 3050 | 915000 | 164700 | 1079700 | ||||||||
Total Taxable value of the dealer Rs.10,05,000/- ( Rs.915000+90000)
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