Please confirm sac code. If such discount was not known prior to supply, financial/commercial credit note can be issued without GST. In such case, credit note with GST can be issued as per provisions of rule 53 of CGST Rules. Hailed as the most important indirect tax reform since independence, the GST Act has been framed with the intention to streamline taxes and introduce a comprehensive and uniform system of taxation for goods and services across India. In case a company is into business of GST Exempt services and offers a cash discount on prompt payment, is there any GST implication on that Cash discount? 92/11/2019-GST dated 7th March, 2019, a supplier can issue a financial credit note for such discounts. However, interest income earned by way of issuing or maintaining credit cards are not included in the said exemption notification, so GST is levied on such interest income. Reserved. I am paying GST on profit and also on C/Ns which I am getting later. 105/24/2019-GST dated 28-6-2019. The tax is payable on the full invoiced amount, regardless of whether or not the customer subsequently takes advantage of the discount and pays less than the invoiced amount. • Discount terms are agreed at the time of supply • Input tax credit on the discount has been reversed by the recipient of supply • Such discount can be linked to that particular supply or invoice • Credit note is issued within six months from the end of the financial year (b) Discount/Incentive not agreed at the time of supply – Sometimes, discounts are provided even if the same are not agreed with the supplier at the time of supply. 2.4 included 18% GST amount. Circular No. • Legal Provisions for GST on Discounts/Incentive Discounts/Incentive are generally given by supplier to increase sales or encourage the buyer to pay promptly. The provision in the new GST Law about treatment of discounts though is clear and uniform across the country, the execution of the provision makes the issue complicated. 2019-20, INCOME TAX SLAB RATES FOR F.Y. In case of post-sale discounts, it is rather the responsibility of the supplier to ensure that GST credit has been reversed by the buyer. 2020-21, INCOME TAX SLAB RATES FOR F.Y. Input credit is available for the GST on commission paid on these services. In such cases, financial/commercial credit note(s) can be issued without GST. As per clarification provided by CBIC vide Circular No. This not so with URD Show in your output supply in GSTR-1: taxable amount is Rs.20, 3390 and GST amount is Rs. Additional post sale discount  by supplier to dealer to increase  Sales  : At time , in order to compete in market , the manufacturer  give additional discount to the dealer for selling goods to the customer at a low price . Required fields are marked *, Notice: It seems you have Javascript disabled in your Browser. This GST treatment applies to all prompt payment discounts regardless of whether your customer takes up and fulfils the payment terms under the prompt payment discount. 15CA & Form 15CB – Lucidly Explained 18 FAQs, Excise – Discounts given on/before time of sale are allowed, VAT – Different treatment in different States, Those given before or at the time of supply, and, The discount has been allowed as per the terms already agreed upon before or at the time of supply, or. Previously, the industry had doubts if businesses would be eligible to claim any credit on the amount for which a credit note has been issued. Thank You. The government in clarification has declared that Advertisements or special promotion drives undertaken by the dealer of a company will be now considered as a service, and would be taxed. TDS is also deductible on GST bill relating to a commission value of a supply. 105/24/2019-GST dated 28-6-2019 is already withdrawn ab- initio vide Circular No. The term ‘trade discount’ is used to describe the amount by which the list price of an item is reduced when selling to a business (i.e., wholesalers or distributors or dealers) that will eventually resell the item. In that case, reduction is GST liability is not possible, but the recipient of goods or services is not required to reverse the Input Tax Credit of tax charged to him in the invoice of supplier – Para 3 and 5 of CBI&C circular No. Being classed as a small supplier depends on your annual revenue. No, there is no GST liability on the discount received. Mainly because here the supplier’s benefit is completely dependent on an action or inaction, with regard to reversal of ITC, by the buyer. For example, the seller allows a $50 discount from the billed price of $1,000 in services that it has provided to a customer. company send credit note for cash Discount with GST. We are deducting cash discount from bill on basic value leaving the gst amount untouched and making the payment after deducting cash discount from basic value and adding the gst amount as per bill. In order to submit a comment to this post, please write this code along with your comment: ea9877320c09fc224d76021e907586d7. GST doesn’t differentiate between trade and cash discounts. GST on brokerage: The tax will be applicable on any income earned through commission or brokerage services. Discount offered after supply: Discount offered after supply is termed as second discount .Often, discounts are offered after supply of goods or services are made. Never miss out on what’s new in GST, Accounting, TDS, and Tax compliance. 10,000 – Rs. Tax Heal. GST Tax Amount is Rs. 36,610 (18% GST tax Amount). Amendments been made by CA Anita Bhadra). However, as per clarification provided by CBIC vide Circular No. Discounts under GST regime Sec.15 of the CGST Act, 2017, reproduced below, deals with the provision of discount, as under: “ 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 Home. In addition, having the agreement in writing helps prevent the customer from taking a discount they haven’t earned. Discounts that are given before or at the time of sale can be deducted from transaction value at the time of sale; no GST will be levied on the same. These incentives given to dealers shall now be taxed. Rather, GST segregates the discounts allowed into two categories: those given before or at the time of supply; those given after the time of supply; How will discounts affect the value of supply? 57283.92. Required fields are marked *. As per second proviso to section 16(2) Where a recipient fails to pay to the supplier of goods or/and services (other than the supplies on which tax is payable on reverse charge basis), the amount towards the value of supply along with tax payable thereon within a period of 180 days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon. Such credit notes will not have GST. Cash Discount not agreed before or at the time of supply. Thus, we can understand that one has fulfil the following conditions –. Contents; Whether interest income on fixed deposits with bank, is an exempted service and to be included in turnover limit for carrying out statutory audit under GST? I want to know about HSN Code Of incentive income, Services offered on wholesale trade, either as contract or on payment of a commission/fee. 2021-22. (Republished with Amendments. What shall be the treatment for the same as per GST provision in my books / gst return. Sec.15 of the CGST Act, 2017, reproduced below, deals with the provision of discount, as under: “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.”. As per this clarification, Companies that offer additional discounts to their dealers as incentives and ask them to conduct advertising campaigns to promote their brand/products. An exception to this general treatment occurs where the amount invoiced to the customer is already net of the early payment discount. 9. TaxHeal is a complete portal for latest Updates and Information on GST, Income Tax Return, Tax Saving, GSTR etc.It also provides Book for CA,TAX exams. Dealers will charge GST on the service they provide to companies, for which companies will be eligible to claim ITC. GST is applicable to both RD & URD dealers. And understand the treatment of discounts/Incentive under GST Law in detail. My client has purchase vehicle from other dealer on behalf of me. All Rights Reserved. This also means that any interest charged on loan transactions by a NBFC is not subje 20,000; EcoSport is offered with discount of up to Rs. Business generally offer trade discounts to increase sales, while cash discounts are given to recover payments speedily. (c) Post sale discount/Incentive provided on fulfilment of certain obligation – Where a discount/Incentive is provided to a dealer / recipient only on complying with certain obligations like advertisement, exhibitions, sales drive, etc., such discounts provided shall be treated as separate transaction. 2020-21/A.Y. SAC 996111 – Services provided for a fee or commission or on contract basis on wholesale trade – 18% SAC 996211 – Services provided for a fee or commission or on contract basis on retail trade – 18%. Actually I and my buyer don’t want to create any future litigation so we are ready to pay GST on original invoice and don’t want to raise GST invoice? An example of a sales discount is for the buyer to take a 1% discount in exchange for paying within 10 days of the invoice date, rather than the normal 30 days (also noted on an invoice as "1% 10/ Net 30" terms). Further, if it is an exempted service, whether proportionate ITC will be required to be reversed? GST liability of the supplier would be reduced if both supplier and receiver of the goods or services are aware of the discount before supply. Copyright © TaxGuru. Cash Discount not agreed before or at the time of supply? Your email address will not be published. In fact, GST segregates the discounts allowed into two categories: Discount allowed before or at the time of supply, and it has been mentioned in the invoice separately, it will not be added in the value of supply. Like freebies in other segments like one pizza is free for 3 pizzas, Incentive also in the same category. HostBooks, The language of business is the registered trademark of Example: Company offers a 10 % discount on the sale of goods worth Rs. discount post the event of supply or sale is an taxable value. The treatment of GST depends on the type of discount/Incentive scheme which we will now see in detail. Ford Figo and Aspire now come with discounts ranging between Rs. New Feature GSTR Returns and Log Management, Know All about E-Invoice Generation System, Process with Applicability. The Central Board of Indirect Taxes and Customs has also clarified that if companies offer discounts to dealers for increasing of sales, to be passed on to customers, GST will be payable on the amount including the discount value. For example, if a dealer purchases goods worth ₹ 10,000 from a supplier and pays 18% GST (₹ 1,800), and later gets a discount of ₹ 1000 from the supplier in the form of a credit note, he/she will be able to claim ITC on ₹ 1,800. All other product names, logos, and brands are the property of their and supplier has expense out the same value as a incentive/ Target Discount paid, is there any GST liability to pay. In such cases, rate of tax will depend on whether it is composite supply or mixed supply. If this company now offers the customer a 10% discount in order to encourage the customer to clear all his debts, but the discount wasn’t agreed before or at the time of supply, and can’t be linked to a particular invoice, this discount will be added in the value of the taxable supply. Recently CBIC withdrawn their circular number 105/2019 dated 28-06-2019. But in the given case you provided services to the supplier of goods, this makes you liable to pay tax to Govt. (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. 10,000 and Rs. Please suggest me. Therefore sometimes it is observed that even in case of discounts where the GST can be reversed, the seller doesn’t mention the GST in the credit note as reversal of credit by the buyer is always uncertain. Of (a) Discount/Incentive agreed at the time of supply – A supplier has to issue a GST credit note where the recipient or buyer has fulfilled the terms of agreement. CGST Act 2017; UTGST Act 2017; IGST Act 2017 ; CGST Ordinance; CGST ( Extention to Jammu and Kashmir ) Act 2017; IGST … 2.4 lakhs from supplier and supplier didn’t issue credit note. Terms & Conditions | Privacy Policy | Refund Policy, INCOME TAX SLAB RATES FOR F.Y. GST has done away with this practice and tax is to be imposed on market value under valuation rules. For example, if a supplier offers a discount of ₹ 500 to a dealer which was not known at the time of sale, and mandates the dealer to pass it on to the consumer, the dealer will be liable to pay tax on the value of goods including the discount of ₹ 500. Further, ITC will be available in relation to supply of goods or services or both as part of such offer Para B of CBI&C circular No. Discounts/Incentive given before or at the time of supply of goods and/or services. 20,000. Will humbled if you enlight me about matter. New Features Income Tax TCS and GST TDS/TCS, Cheque Print Settings and Printing Option, Make Vendor Payments via ICICI Bank and many more. It will not consider and allowed as discount . Taxability of incentives or discounts offered to dealers for undertaking promotional activities would compel organizations to relook their tax liabilities. 105/24/2019-GST dated 28-6-2019. Sir, Whether discount received have to be included in the aggregate turnover for GST Audit? Ford India is offering discounts on the Figo hatchback, Aspire compact sedan and EcoSport compact SUV to pass on the benefits of Goods and Services Tax (GST) that is to be rolled out from 1st July this year.