Sabita Sahoo (622 Points)
21 September 2017
Akash
( )
(375 Points)
Replied 21 September 2017
In my opinion only discount / incentive allowed 'before or at' the time of supply can be reduced for arriving at the value of supply. In this case, since the incentive is given 'after' the supply, it has to be treated as a separate transaction.
If the incentive is given at the time of supply (like cash credit) then it can be reduced.
Sabita Sahoo
(622 Points)
Replied 21 September 2017
Akash
( )
(375 Points)
Replied 22 September 2017
I'm reconsidering my earlier answer. As per Section 15(3) of the CGST Act, 2017,
"The value of the supply shall not include any discount which is given––
(a) before or at the time of the supply if such discount has been duly recorded in the invoice issued in respect of such supply; and
(b) after the supply has been effected, if—
(i) such discount is established in terms of an agreement entered into at or before the time of such supply and specifically linked to relevant invoices; and
(ii) input tax credit as is attributable to the discount on the basis of document issued by the supplier has been reversed by the recipient of the supply.
The incentive in your case, is nothing but a form of discount. Discount given after the supply can be reduced from the transaction value subject to satisfaction of the above three conditions, viz.,
Therefore, if these conditions are satisfied then the incentive value may be reduced from the transaction value to arrive at the value of supply.
Akash
( )
(375 Points)
Replied 22 September 2017
If those conditions are not fulfilled and if you believe that the payment is more in the nature of commission than in the nature of discount, then the transaction can be treated separately as commission received. Rate of GST applicable would be 18% which has to be charged by the supplier who is giving the incentive.
This is just my opinion and I don't claim to be an expert. Please exercise your discretion before relying on it.
CAclubindia
