A company has a policy of allowing a cash discount of 10 percent if a customer pays a particular invoice within 10 days. If the company sells goods worth Rs. 100 to a customer and the customer pays the invoice within 10 days to avail the discount.
How to deal with this cash discount in gst return and do I need to reverse itc corresponding to this cash discount?
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Treatment of cash discount in gst
Replies (14)
if taxable value 100
discount showed in invoice 10
the GST charge on Rs.90
And if company allowed discount at the time of amount received from customers and not showed in invoice the GST charge on 100/-
discount showed in invoice 10
the GST charge on Rs.90
And if company allowed discount at the time of amount received from customers and not showed in invoice the GST charge on 100/-
Raise the Credit note along with GST to the extent of discount....However for the month end transaction, there will be cash flow effect...
if you are raise credit Note then You can reverse itc
Mr Vinod 👍👍👍👍
@ Sharukh
I did't understand why supplier needs to reverse the ITC on raising of Credit note. Can you please explain your view
sir I'm used word ITC from Customers point of view
Ok...Yes customer needs to reverse the credit as per the Credit note issued by the supplier
Consdering the above example only.
Total invoice value including gst is ₹100 and Invoice value after cash discount is ₹ 90 and this is the amount paid by me.
My question is do I need to reverse ITC corresponding to ₹10 i.e Cash discount.
P.S: cash discount is mentioned in invoice.
Total invoice value including gst is ₹100 and Invoice value after cash discount is ₹ 90 and this is the amount paid by me.
My question is do I need to reverse ITC corresponding to ₹10 i.e Cash discount.
P.S: cash discount is mentioned in invoice.
If the cash discount is mentioned in the invoice then, GST needs to be paid on Rs.90.
For Example: Invoice value Rs. 100
(-) Cash discount Rs. 10
Net invoice value Rs. 90
CGST & SGST ( for ex; 12% ) 10.8
Total Invoice value Rs. 100.8
Thanks Vinod ji for showing interest and answering my query.
My purchase invoice is actually like this:
Total taxable amount: ₹ 89.29
cgst+sgst (for ex. 12%) = ₹ 10.71
Total amount= ₹ 100
cash discount
(if paid with 10 days from invoice date) = ₹10.
Net amount payable
(if paid with in 10 days from invoice date) =
₹100 - ₹10 = ₹90
My purchase invoice is actually like this:
Total taxable amount: ₹ 89.29
cgst+sgst (for ex. 12%) = ₹ 10.71
Total amount= ₹ 100
cash discount
(if paid with 10 days from invoice date) = ₹10.
Net amount payable
(if paid with in 10 days from invoice date) =
₹100 - ₹10 = ₹90
First thing the GST liability computation method is wrong in that...Because GST is not required to pay on discount value.
If the invoice is issuing like that then supplier has to pay GST of Rs.10.71 out of Rs. 90 .. and the vendor is eligible for the credit of Rs.9.6 ..because if the vendor does't pay the Rs.10 with in 180 days from the date of invoice( discount )..
thanks
welcome sumeet gupta...........
sir i am cement dealer (wholesell) our sellaer is given credit note to me for discount, the discount is based on payment of advance and pd (i.e promotional discount) my doubt was where can i show the gst wheather in input or in output please explain it thank u
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