Discount On Sale

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This discussion clarifies whether GST is applicable on discounts provided after a sale. Generally, GST is not applied to discounts if they were agreed upon before the supply. However, if a discount is offered post-supply, like in the case of a buyer paying less than the invoiced amount, GST may still be applicable on the discount itself unless specifically agreed otherwise beforehand. The correct procedure involves issuing a credit note, and the treatment in GST returns needs careful consideration to reduce GST liability.

CA Garima Bhayana

CA Garima Bhayana (Querist)
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03 March 2020 One party had sale on July 2019 (let say 100+18=118)but buyer done payment less then invoice value let say 98 so party shown the difference in discount i.e. 2 Rs. and issued credit note of Rs 2 to Buyer. Is GST applicable on discount amount ?

CA Anita Bhadra

CA Anita Bhadra (Expert)
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03 March 2020 Yes
GST on discount is not applicable only on those cases where the it is indicated in agreement before the supply takes place

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CA Garima Bhayana

CA Garima Bhayana (Querist)
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03 March 2020 Thanks for reply Mam. Can you please tell me in detail what will be treatment in GST Returns? Whether GST will be deducted from outward supply ?