Discount - credit notes

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This query is : Resolved

Shalaka (Querist)

20 November 2009 A) In case discount is offered to the cutsomer in Invoice the VAT is to be calculated on the net amount.

e.g Item Cost 100,000
less: Disc 5,000
Net sale 95,000
VAT 4% 3,800
Gross sale 98,800

B) Similarly in case discount is offered through a credit note at a later stage (say on account of turnover discount etc) is vat to be calculated on the same?

e.g. In Invoice
Item Cost 100,000
VAT 4% 4,000
Gross sale 104,000

Credit Note

Discount allowed Item cost 5,000
VAT 4% 200
Total 5,200

Or the discount allowed will only be 5,000 and total VAT of 4,000 will have to be deposited to the govt? In this case the customer is at loss.

Vig , Rakesh

Vig , Rakesh (Expert)

21 November 2009 Dear

as per the VAt act we can avail itc only against the vatable i.e original invoice only. Hence in that case we can raise credit not only for Rs. 5000

Murtaza I Bhagat

Murtaza I Bhagat (Expert)

21 November 2009 I also think that you have to give Credit note for Rs. 5000/- only. not Include VAT on it. its for only one time while Preparing Invoice Mr. Rakesh is right.

Vishnu Saboo

Vishnu Saboo (Expert)

03 January 2010 There are some items, where it is necessary to give discount thru credit note, in that case credit note will be issued on basic amount + applicable vat.
but it should be raised within prescribed time in law.

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