DEAR SIR: FACTS OF THE CASE MY CLIENT HAS RECEIVED DISCOUNT FROM THE COMPANY LIKE CASH DISCOUNT,INCENTIVES AND OTHER DISCOUNTS. THE COMPANY HAS ISSUED CREDIT NOTES WITH GST IN SAME CASES, AND IN SOME CASES NO CREDIT NOTE ISSUED WITH GST. OPINION SOUGHT:

1) WHETHER WE HAVE TO REVERSE THE INPUT TAX BASED ON THE CREDIT NOTES ISSUED

2) WHAT ABOUT THE DISCOUNT FOR WHICH CREDIT NOTE  ARE NOT ISSUED (WHETHER WE HAVE REVERSE THE GST OR NOT

3)WHETHER INTEREST IS TO BE PAID IF YES AT WHAT RATE FOR DELAY IN REVERSING IN THE INPUT CREDIT. SIR PLEASE GIVE YOUR OPINION. THANKING YOU

Reply—If discounts like trade discount, quantity discount etc. are given before or at the time of the supply, GST will not applicable on such trade/Quantity discount. Therefore there is no question to reverse ITC by buyer.

Discount given after supply—

Credit note with GST— If the credit note is issued with GST within the time line provided under section 34 (2) of the CGST Act, the supplier can exclude the discount from value of supply and also reduce his tax liability. In order to complete the process and enable the supplier to make adjustment in value of supply as well as tax liability, it is necessary for the recipient to reverse ITC on discount, as required under section 15 (3) (b) (ii) of the CGST Act. With such reversal, the tax paid and ITC availed against the same will match at invoice level between the supplier and recipient.

Credit note without GST— Where the supplier decides not to issue a credit note under section 34 of the CGST Act or is unable to issue the same due to non-satisfaction of any condition under section 34 of the CGST Act, then there would not be any reduction in output tax liability involved for the supplier. Supplier may issue an accounting / commercial / financial credit note without impact of GST. Further, the recipient would not be liable to reverse theITC.