GST rate if discount applied on value and not item rate.

Sandeep Mahajan (4 Points)

30 October 2021  

I provide wholesales discounts to my buyers based on how much sales we make to the buyer. Basically for buyers with x amount of purchase, the bill has 10% discount. The discount is applied at the end of the bill before the gst is applied. 

The issue is if my product rate is around 1050,gst of 12 percent is applicable. But the discount is not on the item rate but the actual supply value. So for example if the buyer gets 100 pcs then the value is 100x1050 = 105000. 10 percent discount on value of 105000 and then 12 percent gst is applied. 

The collected gst is paid to the GST department while filing the 3b and sales are recorded in gstr1. 

Sometimes the buyer gets into an argument that the 10% discount means the price of item is 945 and 5% gst should be charged. But as I explained the discount is on supply value and not item. 


Are both the methodologies acceptable? Since any kind of charges applied on an invoice like freight, handling, etc doesn't mean that the charges are equally divided on the pc rate and gst rates should change, so the same way of discount is applied on the supply and not the item, gst rates should not change? Can someone she'd some light with specific gst acts?