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ITC ON DISCOUNT RECEIVED

D G MOHAN (PARTNER) (171 Points)

17 April 2020

After purchase of goods from manufacturer cash back of say Rs 1.0 lakh as discount was credited to our account. Do we have to reverse ITC for that amount or not.

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10 Replies

RAJA P M ("Do the Right Thing...!!!") (127832 Points)
Replied 17 April 2020

No need if it's promotional discounts.

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D G MOHAN (PARTNER) (171 Points)
Replied 17 April 2020

Not promotional. They say it as pricing support. For Tractor purchase.

RAJA P M ("Do the Right Thing...!!!") (127832 Points)
Replied 17 April 2020

Yes... No need to reverse the ITC.

D G MOHAN (PARTNER) (171 Points)
Replied 17 April 2020

Thanks.....

Pankaj Rawat (GST Practitioner) (55047 Points)
Replied 17 April 2020

ITC NEED TO BE REVERSE IF :
in term of Section 15(3) of CGST , such Discount which are given after the supply & such Discount is established in term of an agreement entered into at or before the time supply & Specifically linked to relevant invoices.

Hence if the amount 1lac reced by you can linked to invoices & the agreement for such discount is made before the supply then ITC need to be reversed.

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suraj pahuja (TAX PRACTITIONER) (178 Points)
Replied 17 April 2020

ITC to be reversed in your case

D G MOHAN (PARTNER) (171 Points)
Replied 17 April 2020

In our case for each Tractor purchased billing support amount is fixed. For that amount itc should be reversed. yes or no

suraj pahuja (TAX PRACTITIONER) (178 Points)
Replied 17 April 2020

Yes that particular amount of itc would be reversed

Punit Govil (CA FINAL(1st grp passed) CS FINAL M.COM) (228 Points)
Replied 20 April 2020

ITC needs to be reversed in your case. It is not the case of year end promotional discount. Promotional year end discount is different from your case.