GST on credit note for Target based discount

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This discussion clarifies whether GST is applicable to credit notes issued for target-based discounts. Generally, if an additional discount, like a 4% rebate for reaching a £100,000 monthly sales target, wasn't agreed upon before the goods were delivered, GST should not be applied to the discount amount. TDS is also typically not applicable to such discounts.

jitendra bharath muppa

jitendra bharath muppa (Querist)
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19 October 2020 is the credit note which is based on target achivement in sales is liable to tax?.
for ex. if supplier agrees to give an additional discount of 4% if the customer purchases 100000/- from him in a month in form of credit note. should GST be applied on this discount amount. Also whether TDS is also applicable

Lekhraj sood

Lekhraj sood (Expert)
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19 October 2020 No, you can not include GST in credit note if this additional discount was not in agreement before delivery of goods. TDS is not applicable for discount given.

jitendra bharath muppa

jitendra bharath muppa (Querist)
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20 October 2020 Thank you Lekhraj ji.
Just for my clear understanding, Supplier has provided scheme letter related to month target and additional discount mentioning in first week of the month. does this comes under the staement "additional discount was not in agreement before delivery of goods".
Also, could you please give me a reference supporting my query. This would be a great help

Lekhraj sood

Lekhraj sood (Expert)
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20 October 2020 You must have given the PO/agreement to the supplier. Is it mentioned there?
Can you share the agreement/PO and the scheme letter on lekhrsood@gmail.com

jitendra bharath muppa

jitendra bharath muppa (Querist)
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21 October 2020 Scheme letter format send to your mail Lekhraj ji.

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