GST Urgent query
This query is : Resolved
03 July 2020
GST on cash discount to be reversed??
03 July 2020
Reverse if such discount agreed at the time of supply and credit note with GST given.
There will be no differentiation in GST between trade and cash discounts. In fact, GST segregates the discounts allowed into two categories:
Those given before or at the time of supply, and
Those given after the time of supply.
Discount allowed after the supply, it may or may not be added in the value of the supply, depending upon following:
The discount has been allowed as per the terms already agreed upon before or at the time of supply, or
The discount can be linked directly to the invoice of supply,
The input tax credit (ITC) related to the amount of the discount allowed has been reversed by the recipient of the supply.
Hence, the intent or commercial arrangement between the supplier and buyer would decide whether the discount in relation to any supply could reduce the GST liability of the supplier to the extent of such discount. If post supply discounts were not anticipated at the time of supply, it is not allowed to be deducted from value.
There will be no differentiation in GST between trade and cash discounts. In fact, GST segregates the discounts allowed into two categories:
Those given before or at the time of supply, and
Those given after the time of supply.
Discount allowed after the supply, it may or may not be added in the value of the supply, depending upon following:
The discount has been allowed as per the terms already agreed upon before or at the time of supply, or
The discount can be linked directly to the invoice of supply,
The input tax credit (ITC) related to the amount of the discount allowed has been reversed by the recipient of the supply.
Hence, the intent or commercial arrangement between the supplier and buyer would decide whether the discount in relation to any supply could reduce the GST liability of the supplier to the extent of such discount. If post supply discounts were not anticipated at the time of supply, it is not allowed to be deducted from value.
04 July 2020
Credit notes provided by Vendor doesnt mention GST amount simple Discount amount is mentioned.
04 July 2020
No reversal required in such a case.
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