can cash discount & trade discount reduce sales?

No,It's purely indirect expenses,will effect the net profit of the company,not sales

Request to pls share any literature or any document which shows that cash discount cannot be reduced from sales.

Discount allowed is deductible from sales (taxable turnover) as per rule 3(2)(c) of the Karnataka Value Added tax rules, 2005. However the tax collected on sales shall be payable to the department and cannot be reduced to the extent of cash discount deductible.

Further it is important to note that VAT is not reversable on the discounts allowed in the form of debit / credit notes as stated in provisio to rule 3(2) of the Karnataka VAT Rules, 2005.

Please feel free to revert with your comments.

Originally posted by : Jyothi Sharma
	Request to pls share any literature or any document which shows that cash discount cannot be reduced from sales.

@ PC C

does ur statement holds good after the below data?

A Guide to KARNATAKA VAT Audit

(2) The taxable turnover shall be determined by allowing the following

deductions from the total turnover:

(a) The aggregate of the sale prices received and receivable by the

dealer in respect of sales of any goods in the course of INTER-

STATE trade or commerce and export out of the territory of India and

sales in the course of import into the territory of India.

(b) The value of all goods transferred or despatched outside the State

otherwise than by way of sale.

(c) All amounts allowed as discount:

Provided that such discount is allowed in accordance with the regular

practice of the dealer or is in accordance with the terms of any

contract or agreement entered into in a particular case; and the tax

invoice or bill of sale issued in respect of the sales relating to such

discount shows the amount allowed as discount; and

Provided further that the accounts show that the purchaser has paid

only the sum originally charged less discount.

(d) All amounts allowed to purchasers in respect of goods returned by

them to the dealer:

Provided that the goods are returned within a period of six months

from the date of delivery of the goods and the accounts show the date

on which the goods were returned, the date on which the refund

was made and the amount of such refund together with the details

of credit notes issued as specified under sub-section (1) of the

Section 30.

(e) All amounts received from the seller in respect of goods returned to

them by the dealer, when the goods are taxable under sub-section (2)

of section 3: Provided that the goods are returned within period of six

months from the date of delivery of the goods and the accounts show

the date on which the goods were returned and the date on which the

refund was made and the amount of such refund.

(f) All amounts for which goods exempt under Section 5 are sold.

(g) All amounts realised by sale by a dealer of his business as a whole.

(h) All amounts collected by way of tax under the Act;

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