Discounts under GST regime Sec.15 of the CGST Act, 2017, reproduced below, deals with the provision of discount, as under: “The value of the supply shall not include any discount which is given –
The logical inference which could be drawn from plain reading of above provision is:
1. Discount, if mentioned on the face of the invoice, can be reduced from the taxable value of the supply of goods.
2. Discount, even if not mentioned on the face of the invoice can be reduced from the taxable value, if following conditions are satisfied:
i) Discount is established in terms of an agreement before supply. In simple words, both supplier and recipient are aware and have agreed about the discount before the supply.
ii) Discount is linked to a specific supply invoice.
iii) ITC attributable to the discount is required to be reversed by the buyer or recipient of the supply.
GST liability of the supplier would be reduced if both supplier and receiver of the goods or services are aware of the discount before supply.
There will be no differentiation in GST between trade and cash discounts.In fact, GST segregates the discounts allowed into two categories: Those given before or at the time of supply, and Those given after the time of supply.