Section 194R

Answer to Q.4 in Circular No. 12 of 2022:-

"Sales discounts, cash discount or rebates allowed to customers from the listed retail price represent lesser realization of the sale price itself. To that extent purchase price of customer is reduced.  Logically these are also benefits though related to sales/purchase. Since TDS under section 194R of the Act is applicable on all forms of benefit/perquisite, tax is required to be deducted. However, it is seen that subjecting these to tax deduction would put seller to difficulty. To remove such difficulty it is clarified that no tax is required to be deducted under section 194R of the Act on sales discount, cash discount and rebates allowed to customers. 3 There could be another situation, where a seller is selling its items from its stock in trade to a buyer. The seller offers two items free with purchase of 10 items. In substance, the seller is actually selling 12 items at a price of 10 items. Let us assume that the price of each item is Rs 12. In this case, the selling price for the seller would be Rs 120 for 12 items. For buyer, he has purchased 12 items at a price of 10. Just like seller, the purchase price for the buyer is Rs 120 for 12 items and he is expected to record so in his books. In such a situation, again there could be difficulty in applying section 194R provision. Hence, to remove difficulty it is clarified that on the above facts no tax is required to be deducted under section 194R of the Act. It is clarified that situation is different when free samples are given and the above relaxation would not apply to a situation of free samples........."

1. Yes it includes Retailers also

2. Yes, If discount given at the time of raising GST invoice and other wise recovered by issuing CN subsequently,  

Hi Akansha,

1. Words customers should be construed as including retailers.

2. Personally, I find the position of CBDT to be weird when it says that it is giving relaxation.   Any discount is just a price reduction for promotion of business.  It cannot be by any means considered to be a benefit or perquisites..         Free tickets, free passes separate cash benefit etc. could really be considered to be benefits or perquisites and not the discount from listed price...  

So even if CBDT had clarified the other way round, I would believe that circular is not proper and no deduction is required under 194R and would have advised the client to take up the matter to court considering that departmental circulars bind only the department and not assessee. 

3. GST should be on discounted rate only subject to satisfaction of s.15 of CGST Act, 2017