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GST on Price discount / Qty discount.

Harish Haridas (Asst. Manager - Finance) (27 Points)

28 November 2019

Hi,

Our company is in FMCG( Manufaturing and trading). We are selling our goods to superstokiest / Distributor for 3% and 10 % margine respectivly. We are offering Schemes ( Qty discount ie: 2+1 offer and price disacount) to sell the product to the retail market. We have our own application to track the Sales of distributor/Super stokiest to Retailer / Distributors respectivly.

in the month end as per sales done by distributor in aapllication we will give the scheme to distributors/Superstokiest.

Can you please help us to understand the GST iplications on such Schemes. and also know the rate of GST if chargable.

Regards

HARISH

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5 Replies

Gokul Sharma (jamshedpur) (3898 Points)
Replied 28 November 2019

Issue credit note to the supplier for the above

Harish Haridas (Asst. Manager - Finance) (27 Points)
Replied 28 November 2019

Can you tell us the GST implications and rate of tax to be charged.

Sivaramakumar (GM-ACCOUNTS) (142 Points)
Replied 28 November 2019

If you invoice your distributor at the discounted prices, then gst is applicable at the reduced rate for each item as applicable. In case you invoice for the full value and provide a discount at a later date Gst is payable for the full value only.Credit notes can be issued only for goods returned or price differences and not for discount .Any discount provided should be primafacia mentioned in the invoice at the time of supply

ANKIT JAIN (CHARTERED ACCOUNTANT) (35 Points)
Replied 28 November 2019

Discount can be given by quantity or Price only.

Quantity Discount:

In this case no separate treatment is required means if u are selling 2 products for 2000 and 1 free then a single invoice will be issue amounting rs.2000 containing all 3 items in invoice. While doing valuation of supply we will assume that this rs. 2000 if for all 3 items.

Price Discount:

Price discount can be given in two ways either at the tine of supply or after supply.

At the time of supply:

In this case you have to less it from invoice value and calculate GST on discounted price.

After Supply:

If at the time of supply there was prior agreement of conditions of discount between both parties then after supply when conditions fulfill and supplier is providing discount then he may issue credit note after supply and can reverse GST but subject to condition that recipient had reverse ITC in their return.

Last date to reverse GST will be due date of month of September or date of filling of annual return whichever is earlier.

I hope you are satisfied by my reply if i make any mistake please correct me.

Thank you.