Become a Govt. Certified GST Practitioner in just 60 hrs. Register Now!

Cash discount query

Ajnas (Student) (844 Points)

13 February 2021

If purchase value after allowing cash discount( discount received at time of sale) Rs. 180000+GST at then cash discount received Rs. 30000 at time of sale it is required to record in the books? Actual Cost Rs. 210000 after cash Rs. 180000,gst is charged on Rs.180000? what is purchase cost Rs 180000 or 210000?

Reply
Follow
Share

4 Replies

Rama chary Rachakonda (Master in Accounts & high court Advocate email ID:ramachary64@gmail.com voice no:9989324294) (7778 Points)
Replied 13 February 2021

Taxes always calculate cost of goods sold minus cash discount in invoice only.
The invoice amount caculation will be as follows.
item price x item amount = item subtotal.
( item subtotal - item discount ) + item tax = item total.
( item total - invoice discount ) + invoice tax = invoice amount.

Upgrade to CAclubindia Pro. Subscribe Now!

CA Altamush Zafar (GST Consultant) (15986 Points)
Replied 13 February 2021

The cost to the purchaser will be 180000

MR GST CONSULTANCY (74 Points)
Replied 16 February 2021

The correct analysis for cash discount
cash discount is an expense for the seller and income for the purchaser so the cost would be the total value.
i.e. actual cost - 2,10,000/- , cash discount shown in p&l for seller.