Trade discount

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Muthu (Querist)
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18 June 2014 Dear Sir,

Please tell Trade Discount received from Sundry Creditors is in under Purchase account or Indirect Income,

Rupesh Jain

Rupesh Jain (Expert)
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18 June 2014 it under the purchases a/c

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Muthu

Muthu (Querist)
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19 June 2014 Dear Sir,

Thank you for the same, we have not received the trade discount in bill it is come by credit note, we entered the credit note in purchase account,

purchase value is affected isn't right?

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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02 August 2025 Trade discount received from sundry creditors generally reduces the cost of purchases, so it is recorded **against the Purchase account** (i.e., it reduces the purchase value).

**Regarding your question about credit notes:**

* If the trade discount was **not mentioned in the original invoice** but you received a **credit note later**, you should **record the credit note by reducing the Purchase account** accordingly.
* This means your purchase expenses will reduce by the amount of the credit note.

So yes, the purchase value is affected (reduced), which is correct accounting treatment.

**Summary:**

* Trade discount (whether on invoice or via credit note) reduces the purchase cost.
* Record credit notes from creditors as a reduction in Purchase account, not as indirect income.

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