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'.
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.
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