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CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Value of Supply

A manufacturer gives a post-supply volume discount to a dealer. Which combination of conditions must be met for this discount to be excluded from value of supply under the CGST Act, 2017?

A post-supply discount is excluded only if it is established under an agreement entered at or before the time of supply, is specifically linked to relevant invoices, and the recipient has reversed the input tax credit attributable to the discount on the basis of the supplier's document.

  1. AIt is established under an agreement made at or before the time of supply and linked to relevant invoices, and the recipient has reversed the ITC attributable to itCorrect
  2. BIt is announced by the supplier after the supply and is shown in a credit note, regardless of any agreement
  3. CIt is established under an agreement made after the supply, and the supplier pays tax on it
  4. DIt is linked to invoices, and the supplier has reversed his own output tax liability

Explanation

Section 15(3)(b) requires the discount to be established by an agreement at or before the time of supply, specifically linked to relevant invoices, and the recipient must have reversed ITC attributable to the discount based on the supplier's document. The other options omit or alter these conditions.

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