Meena Suri (Accountant) (25 Points)
27 April 2023Can anyone please help me to confirm is there any legal implications on a Pvt Ltd Company for issuing Rebate/discount @ 25% to his clients for export services rendered?
If yes, Please provide ways, how can we get out of those implications.
CA SANDESH MAHIPAL
(Practicing in GST and MSME )
(1985 Points)
Replied 27 April 2023
Meena Suri
(Accountant)
(25 Points)
Replied 27 April 2023
Yes, We already offered Discount @ 25% on the Fees Invoice. And payment is already received accordingly for the export proceeds, but now we came to know that according to FEMA guidelines we can't offer more than 5% discount on export proceeds. Is it True? And if yes, How can we deal with this situation.
Example for reference:
Invoice Amounts to- 5Lac
Discount- 25% i.e. 1,25,000
Net Invoice Value- 3,75,000
Payment received- 3,75,000
Now we came to know that we can't offer more than 5% discount on the Invoice as per FEMA guidelines.
Please guide for this.
Thanks.
Yasaswi Gomes new
(Finance )
(4514 Points)
Replied 28 April 2023
Yeah what you did is correct. As per revenue recognition the sales value is net of sales meaning invoice value minus taxes and discount. Fema is not wrong and you need to claim the discount in the courts. Unfortunately many things are like that.
Meena Suri
(Accountant)
(25 Points)
Replied 28 April 2023
As per Above mentioned reply, we can issue discount @ 25% in future also. Right?
And invoices which are already raised with high discount rate i.e. 25%, have no disallowance in respect to income tax or GST? Please confirm.
Yasaswi Gomes new
(Finance )
(4514 Points)
Replied 28 April 2023
I mean we can't do it against fema rules. Standards are different and government compliance is different. I get irritated many times myself cause im not tax accountant and I can't asses tax impacts due to government rules.
CAclubindia
