Discount & GST: Reversing Input Tax Credit Explained

Proper Payment - Discount - GST Impact

Fareed

Accountant

84 Points Posted on 17 November 2021

Dear Expert,

X Pvt Ltd purchasing raw materiel from Z Pvt Ltd.

Z Pvt Ltd company offer If X Pvt Ltd company made payment on 30 days will discount 1% on value of goods.

that discounted portion Availed ITC will reverse in GST return?

Please clarify

Thanks & Regards

Fareed

Replies (2)

Quick Summary

This discussion clarifies the GST implications of early payment discounts. If a discount is agreed upon at the time of sale, the recipient may need to reverse their Input Tax Credit (ITC). This is because the supplier will reduce their taxable supplies and GST liability accordingly.

CA Altamush Zafar

GST Consultant

10402 Points Posted on 18 November 2021

Yes if the at the time of sale it was already decided for such discount then ITC needs to be reversed by recipient since the supplier wqill reduce his supplies along with GST liability

Fareed

Accountant

84 Points Posted on 18 November 2021

Thanks for your guidance..!

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Proper Payment - Discount - GST Impact

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CA Altamush Zafar

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