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Cash discount & VAT

Somnath (Job) (89 Points)

25 October 2007

As per Maharastra sales tax department , we can deduct Trade Discount which is offered in the invoice before levy of VAT but Cash Discount cannot deduct for the purpose of levy of VAT.

Is there any body ,who can confirm ( with some ref ) whether the same procedure is applicable for other states ( West Bengal , Orissa , Bihar , Jharkhand & Assam ) or not ??

Regards

S.Mullick

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5 Replies

CA. Dashrath Maheshwari (TaXpert) (15090 Points)
Replied 25 October 2007

You can deduct Trade discount which is offered in the invoice before levy of VAT. You cannot deduct cash discount for the purpose of levy of VAT.

CA RAJESH GUPTA (CA) (321 Points)
Replied 26 October 2007

Trade discount is allowed not cash discount.

CA RAJESH GUPTA (CA) (321 Points)
Replied 26 October 2007

The above said procedure will be world wide

Vijay K. Agrawal (Service) (608 Points)
Replied 26 October 2007

none of the act allow cash discount becuase it reflect compensation for loss interest on account of early payment

CA. O.P. Agarwalla (C.A.) (2916 Points)
Replied 20 November 2007

In Assam Cash discounts at the time of sale is excludible from Sale pice. I am quoting you clause 44 of section2 of Assam VAT Act and I would invite ur attention on the expalanation-II 2(44) "sale price" means the amount of valuable consideration paid or payable to a dealer for any sale made including any sum charged for anything done by the dealer in respect of goods at the time of or before delivery of the goods other than the cost of freight or delivery or the cost of installation in cases where such cost is separately charged. Explanation I: For the purpose of this clause 'sale price' includes,- (i) the amount of duties or fees levied or leviable on the goods under the Central Excise Act, 1944 (Central Act 1 of 1944) or the Customs Act, 1962 (Central Act 52 of 1962) or the Assam Excise Act, 1910 (Assam Act 1 of 1910) or under any other enactment whether such duties or fees are paid or payable by or on behalf of the seller or the purchaser or any other person; Comment:- [The definition has been substituted by Assam Act No. XIII of 2005 brought in to force from 01.05.2005 vide Government Notification No. FTX.55/2005/2 dated 28th April, 2005. Prior to the substitution, the definition read as under:- “the amount of duties or fees levied or leviable on the goods under the Central Excise and Salt Act, 1944 (Central Act 1 of 1944) or the Customs Act, 1962 (Central Act 52 of 1962) or the Assam Excise Act, 1910 (Assam Act 1 of 1910) or under any other enactment whether such duties or fees are paid or payable by or on behalf of the seller or the purchaser or any other person;”] (ii) in relation to the transfer of property in goods (whether as goods or in some other form) involved in the execution of works contract, such amount received or receivable as consideration; (iii) in relation to the delivery of goods on hire purchase or any system of payment by instalments, the amount of valuable consideration payable to a person for such delivery; (iv) in relation to transfer of the right to use any goods for any purpose (whether or not for a specified period) the valuable consideration received or receivable for such transfer; and (v) Deleted Explanation II: For the purpose of this clause, 'sale price' does not include,- (i) tax charged or chargeable under this Act; (ii) any amount allowed by seller of goods to the purchaser as cash discount or commission or trade discount at the time of sale of goods according to the practice normally prevailing in the trade;