Taxability Of Discount Received(Post Supply)

Sunil kumar pattuvakkaran
watch_later 4 months, 1 week ago

Example: A -Supplier M - Buyer

A offering to M 10% discount for getting prompt payment at the year end:

1.No prior period agreement

2.Can not trace bill wise.

For this at the year end, A issues to M a credit note( without charging GST).

Query 1: This discount amount is taxable income from the part of 'M'.

           2: If its income, How can pay the tax by 'M'.

Kindly give reply in detail...thanks in advance

sir kindly check an article came in tax guru - sunil kumar pattuvakkaran
1 Answer

GST Payer watch_later 4 months ago

This is cash discount (for prompt payment), so GST will not be charged in credit or debit note.

GST is applicable when there is a supply and in this case there is no supply, so GST is not chargeable on this case.

GST will be charged in Debit Note or Credit note only for trade discount.

So answer to your question is:

  1. GST is not chargeable,
  2. No need to pay GST

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