Quick Summary
The Central Board of Indirect Taxes and Customs (CBIC), through Circular No. 251/08/2025-GST dated September 12, 2025, has issued a detailed clarification on the treatment of secondary or post-sale discounts under the Goods and Services Tax (GST). The clarification addresses industry concerns and r
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FAQ :
The circular aims to clarify the Goods and Services Tax (GST) treatment of secondary or post-sale discounts, addressing industry concerns and removing ambiguity.
No, post-sale discounts offered purely for competitive pricing and sales promotion are generally not subject to GST. However, GST will apply if dealers provide specific promotional services under an agreement.
GST will be applicable if dealers undertake specific sales promotional activities, like advertising campaigns or co-branding, as part of a formal agreement with the manufacturer, and these are considered distinct services.
Yes, in certain cases where there's an agreement with an end customer for a discounted price, a manufacturer may issue commercial or financial credit notes to the dealer to facilitate this.
No, the recipient is not required to reverse ITC attributed to discounts provided on financial/commercial credit notes, as there is no reduction in the original transaction value or corresponding tax liability.
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