Discount/Incentive Received by Supplier

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This discussion explores how buyers should account for discounts or incentives received from suppliers at the time of payment. The primary question is whether to reduce the purchase cost or record it as other income. While reducing purchase cost seems logical, it can lead to discrepancies with GSTR-2A if no credit note or tax invoice is issued. The consensus leans towards accounting for these as other income in such cases to maintain accurate records.

Khushal Rawat

Khushal Rawat (Querist)
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31 October 2023 Dear Sir,
When buyer received discount/incentive from supplier at the time of payment. Supplier less above amount in buyer's ledger. Which is right way to adjust above income in buyer's book -1. Less Purchase cost, 2. Add other income in profit & loss a/c .

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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01 November 2023 It's less purchase cost.

Khushal Rawat

Khushal Rawat (Querist)
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01 November 2023 But Sir, When supplier issued credit note of less amount, No any tax invoice issue to buyer . In this case Purchase figure, GSTR-2A and in our Books will different

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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01 November 2023 In such a case account it as other income.

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