Hsn code on incentive
This query is : Resolved
12 September 2024
Suppose if i purchase good on 1095 ( including gst ) and i can sale that on 1140 (including gst) but my buyer allow me to sale it on 1110 and 30 rs he will reimburse me . The item is taxable at 12%. Then this incentive is taxable at 12% or 18% and how will i show it in gstr . Which hsn should i put and also let me which qty i need to put along with hsn
12 August 2025
Your Scenario:
Purchase price (including GST @12%) = Rs. 1095
Sales price (including GST @12%) = Rs. 1140
Buyer allows you to sell at Rs. 1110 (including GST), and reimburses Rs. 30 separately as an incentive.
Tax rate on the item = 12%
You want to know:
What GST rate applies on the Rs. 30 incentive?
How to report it in GSTR?
Which HSN code and quantity to use?
1. GST Rate on Incentive (Rs. 30):
The incentive is linked to the sale of goods and forms part of the transaction value.
According to GST law, any amount charged or reimbursed by the buyer that forms part of the consideration for supply is taxable at the same rate as the principal supply.
Since the goods attract 12% GST, the Rs. 30 incentive is also taxable at 12% (not 18%).
2. How to Show in GSTR-1:
The total taxable value of the supply = Rs. 1110 (sale price including GST) + Rs. 30 (incentive) excluding GST on these amounts.
You need to report the total value before GST.
For example:
Compute taxable value excluding GST for Rs. 1110 (selling price including 12%)
Compute taxable value excluding GST for Rs. 30 incentive (also taxed at 12%)
Sum both taxable values and report under the same HSN code and tax rate.
3. HSN Code and Quantity:
Use the HSN code of the goods sold (same as original goods).
Quantity should correspond to the actual quantity of goods sold (the incentive is not linked to additional quantity, so it doesn’t affect quantity).
Example Calculation:
Selling price (incl. GST) = Rs. 1110
GST rate = 12% (i.e. GST part = 1110 × 12/112 = Rs. 118.39 approx)
Taxable value (excl. GST) = 1110 - 118.39 = Rs. 991.61 approx
Incentive = Rs. 30 (reimbursed)
GST on incentive = 30 × 12/112 = Rs. 3.21 approx
Taxable value (incentive) = 30 - 3.21 = Rs. 26.79 approx
Total taxable value to report = Rs. 991.61 + Rs. 26.79 = Rs. 1018.40
Tax rate = 12%
HSN = same as goods sold
Quantity = same as goods sold
Purchase price (including GST @12%) = Rs. 1095
Sales price (including GST @12%) = Rs. 1140
Buyer allows you to sell at Rs. 1110 (including GST), and reimburses Rs. 30 separately as an incentive.
Tax rate on the item = 12%
You want to know:
What GST rate applies on the Rs. 30 incentive?
How to report it in GSTR?
Which HSN code and quantity to use?
1. GST Rate on Incentive (Rs. 30):
The incentive is linked to the sale of goods and forms part of the transaction value.
According to GST law, any amount charged or reimbursed by the buyer that forms part of the consideration for supply is taxable at the same rate as the principal supply.
Since the goods attract 12% GST, the Rs. 30 incentive is also taxable at 12% (not 18%).
2. How to Show in GSTR-1:
The total taxable value of the supply = Rs. 1110 (sale price including GST) + Rs. 30 (incentive) excluding GST on these amounts.
You need to report the total value before GST.
For example:
Compute taxable value excluding GST for Rs. 1110 (selling price including 12%)
Compute taxable value excluding GST for Rs. 30 incentive (also taxed at 12%)
Sum both taxable values and report under the same HSN code and tax rate.
3. HSN Code and Quantity:
Use the HSN code of the goods sold (same as original goods).
Quantity should correspond to the actual quantity of goods sold (the incentive is not linked to additional quantity, so it doesn’t affect quantity).
Example Calculation:
Selling price (incl. GST) = Rs. 1110
GST rate = 12% (i.e. GST part = 1110 × 12/112 = Rs. 118.39 approx)
Taxable value (excl. GST) = 1110 - 118.39 = Rs. 991.61 approx
Incentive = Rs. 30 (reimbursed)
GST on incentive = 30 × 12/112 = Rs. 3.21 approx
Taxable value (incentive) = 30 - 3.21 = Rs. 26.79 approx
Total taxable value to report = Rs. 991.61 + Rs. 26.79 = Rs. 1018.40
Tax rate = 12%
HSN = same as goods sold
Quantity = same as goods sold
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