Quick Summary
The Central Board of Indirect Taxes and Customs (CBIC) has issued a crucial clarification on the treatment of secondary or post-sale discounts under the GST. According to the circular, trade discounts given by manufacturers to dealers solely for competitive pricing and boosting sales will not attract GST. However, the CBIC made it clear that GST will be applicable if such discounts are linked to specific promotional activities undertaken by dealers on behalf of manufacturers. These include co-b
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FAQ :
No, the CBIC has clarified that trade discounts given solely for competitive pricing and to boost sales will not attract GST. However, if these discounts are linked to specific promotional activities agreed upon by both parties, GST may apply.
Discounts offered by manufacturers to dealers purely for competitive pricing and to increase sales, where the dealer is acting on a principal-to-principal basis, are not subject to GST.
GST will be applicable if the post-sale discounts are linked to specific promotional activities by the dealer on behalf of the manufacturer, such as advertising or special sales drives, and are part of a formal agreement.
The clarification was issued in response to multiple queries from businesses seeking guidance on whether post-sale discounts constitute consideration for services, aiming to resolve interpretational disputes.
No, input tax credit (ITC) remains unaffected when financial or commercial credit notes are issued in relation to these types of discounts.
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