Treatment of secondary or post-sales discounts under GST  vide Circular No. 105/24/2019-GST dated 28-06-2019

> CBIC has clarified the treatment of post sales discount citing three situations based on -the nature of the discounts. The situations has been cited here-in-below:

Situation – 1 Additional discount is offered in lieu of additional activity/ promotional campaign by dealer
Treatment Promotional activity shall be treated as a separate transaction. The dealer shall become supplier of service and the supplier becomes recipient.
Value of Supply Additional Discount offered
ITC Admissibility Supplier shall be eligible to claim credit

Situation – 2 Additional discount is offered to dealer in order to sell the goods at a special reduced price to the customer
Treatment Additional discount would represent consideration flowing from the supplier of goods to the dealer for the supply made by the dealer to the customer
Value of Supply Additional Discount offered + Consideration payable by the customer
ITC Admissibility Customer, if registered, shall be eligible to claim credit

Situation – 3 Post sales discount has been offered by way of Financial / commercial credit notes
Treatment ITC shall not be reversed on such post-sales discount received provided the dealer pays the value of supply (net of discount) along with tax originally charged

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One Comment

  1. shashi says:

    Dear Sir,

    Please refGST Circular dtd 28.06.2019 towards clarification on post sale discounts under GST,

    Requesting you to confirm on the effective date applicable on sales under this notification.

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November 2020