Vat related question

If it is trade discount (not cash discount), then no VAT. In you case, transaction would be treated as the one without consideration and hence no VAT can be levied.

Generally there are no sales like that with 100% discount. The discounts should not be occasional. It should be as per some general policy applied to all cusomers,which requires to be proved. Trade discounts are on the volume and sometimes on old on outdated products announced previously. Cash discounts are also declared on the invoices or separately, on prompt payments made against credit sales made to familiar customers. Any sudden and unexplained discounts like on bad debts are not allowed. In the case of any discounts ,other than those shown in the invoices,a credit/debit note should be issued by the concerned dealers and accounted.Such discounts are exempt from VAT .......mjk