Discount offered by trader
This query is : Resolved
28 February 2020
Sir / Madam,
Pls. let know whether discount offered by one trader to other trader in the course of business will be defined as "TRADE DISCOUNT" and will not have any impact into books of accounts " Discount given and/or received" ledger.
For ex: "X" Trader having GST no. issued tax invoice offering discount on bill of Rs.10,000 to Buyer "Y":
Gross amt : 10,000=00 qty: 1000 units per unit:10/Unit (10,000/1000 units)
Discount : 1,000=00
CGST/SGST(As applicable) (will be computer after discount from gross value which comes to Rs.9000).
So while booking this purchase bill recd from "X" my purchase value would be 9,000=00 (Rs.10,000-1,000) like wise my per unit cost would be 9.00 (9000/1000 unit). In short there will be no effect of discount of Rs.1,000=00 offered in bill by "X" a trader Seller) in his sale bill to "Y' (a buyer.)as it comes under "Trade discount" and and accounting rules does not allow effect of "Trade discount" into books of ac/s of "Y" a buyer.
However, in case of giving a effect of discount offer by seller as per his bill above is also a trade discount and hence no effect will be given also in books of seller offering a discount offered into bill raised to buyer.
Pls. let know whether discount offered by one trader to other trader in the course of business will be defined as "TRADE DISCOUNT" and will not have any impact into books of accounts " Discount given and/or received" ledger.
For ex: "X" Trader having GST no. issued tax invoice offering discount on bill of Rs.10,000 to Buyer "Y":
Gross amt : 10,000=00 qty: 1000 units per unit:10/Unit (10,000/1000 units)
Discount : 1,000=00
CGST/SGST(As applicable) (will be computer after discount from gross value which comes to Rs.9000).
So while booking this purchase bill recd from "X" my purchase value would be 9,000=00 (Rs.10,000-1,000) like wise my per unit cost would be 9.00 (9000/1000 unit). In short there will be no effect of discount of Rs.1,000=00 offered in bill by "X" a trader Seller) in his sale bill to "Y' (a buyer.)as it comes under "Trade discount" and and accounting rules does not allow effect of "Trade discount" into books of ac/s of "Y" a buyer.
However, in case of giving a effect of discount offer by seller as per his bill above is also a trade discount and hence no effect will be given also in books of seller offering a discount offered into bill raised to buyer.
30 May 2020
Y should also book all purchases taking into account all discounts received to have a clear understanding and have a transparency in the books of accounts.
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