Taxability of post supply discount

This query is : Resolved

SUNIL KUMAR PATTUVAKKARAN (Querist)
Follow

13 June 2018 For example
A company doesn’t have a policy of offering cash discounts to the customers at the time of payment, however, has supplied goods worth Rs. 100 to a customer who didn’t pay his debts. If this company now offers the customer a 10 percent discount in order to encourage the customer to clear all his debts, but the discount wasn’t agreed before or at the time of supply, and can’t be linked to a particular invoice, this discount will be added in the value of the taxable supply.

Example:

A m

supplier buyer

A offering to M 10% discount for getting prompt payment at the year end:

1.No prior period agreement

2.Can not trace bill wise.

For this at the year end, A issues to M a credit note( without charging GST).

Query 1: This discount amount is taxable income from the part of 'M'.

2: If its income, How can pay the tax by 'M'.

Kindly give reply in detail...thanks in advance

Vishakha Kejriwal.

Vishakha Kejriwal. (Expert)
Follow

14 June 2018 Mr. M needs to reverse the credit on the discount portion since it tantamount to non-payment of full consideration for receipt of goods. Further GST would be payable on the entire Rs.100 by Mr.A.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now