Mr. A  sold 2000 unit of goods to Mr. B for Rs. 40,000 and total unit sold during the year to Mr. B after including these units is 6000 units. As per terms of the agreement if Mr. A is purchasing more than 2000 unit of goods in a year than Mr. A is allowing 10% discount in all the supplies. GST rate is 18% on the same. How discount will be recorded?


As per section 15(3) The value of the supply shall not include any discount which is given after the supply has been effected, if'

(i) such discount is established in terms of an agreement entered into at or before the time of such supply and specifically linked to relevant invoices; and
(ii) input tax credit as is attributable to the discount on the basis of document issued by the supplier has been reversed by the recipient of the supply.

In this case as discount is given after sale as per the terms of agreement therefore it will not be included in transaction value of supply. Thus Mr A will issue credit note for difference in transaction value due to discount for each invoice as per Section 34 of CGST Act subject to the condition that the ITC of the same shall be reversed by the recipient.