in cemant industries IF A purchased a cemant bag of RS 100 and paid 28 RS GST on it to supplier and sell to customer of RS 70 and paid 20 RS GST to govt through the input credit of RS 28
seller sold good on loss but cemant company i.e supplier send a credit note to seller of RS 40 as a discount on RS 100 now seller cost of good sold became RS 60 and he earned a profit of RS 10 but not paid GsT on profit of RS 10 and a apply to govt a refund application of RS 8 (28-20)
is this correct or incorrect
can he sold good on loss and after sale receive discount from supplier
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Input credit
Replies (2)
Dear Sachin,
Thank you for the good question, your Question contains 3 creteria 1. Buying 2. Selling (profit/loss) 3. Discount.
1. When you buy the Cement bag you are eligible to take the Credit as per Sec.16 of CGST ACT
2. when you are selling it is on the Invoice value whether it is an profit or loss it is just like an Taxable supply as per Sec.16 (value of Taxable supply)
3. Discount: further whether you know that the discount is available to you before you raise the supply or situation maybe discount effected after supply.
Sec 15(3) The value of the supply shall not include any discount which is given––
- before or at the time of the supply if such discount has been duly recorded in the invoice issued in respect of such supply; and
- after the supply has been effected, if—
(i) such discount is established in terms of an agreement entered into at or before the time of such supply and specifically linked to relevant invoices; and
(ii) input tax credit as is attributable to the discount on the basis of document issued by the supplier has been reversed by the recipient of the supply
however this point as a receipent when you upload the credit Note youe Input tax credit will be automatically reduced.
regards,
Bhavya.P
In addition to Reply By Ms. Bhavya , yes its common practice in cement trade , but what is use of accumulation Of ITC in Books , you are also not eligible for refund , & moreover Section 15 CGST do not permits such discount (without GST)
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