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Taxability of post supply discount

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This query is : Resolved

SUNIL KUMAR PATTUVAKKARAN (Querist)
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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)
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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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