GST IS NOT LEVIABLE ON CASH DISCOUNT, INCENTIVES, SCHEMES OFFERED BY SUPPLIERS WITHOUT ADJUSTMENT OF GST

"The value of the supply shall not include any discount which is given,-

1. before or at the time of the supply if such discount has been duly recorded in the invoice issued in respect of such supply; and b. after the supply has been effected, if,-
2. 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
3. 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".

The applicant can avail the Input Tax Credit of the full GST charged on the invoice of the supply and no proportionate reversal of ITC is required in respect of commercial credit note issued by the supplier for Cash discount for early payment of supply invoices (bills) and Incentive/schemes provided without adjustment of GST if the said discount is not covered under Section 15(3) (b) of CGST Act, 2017 and the said discounts is not in terms of prior agreement. This is subject to the conditions that the GST paid for the said goods/service is not reversed or reimbursed / re-credited by the supplier to the applicant in any manner.

Since the amount received in the form of the credit note is actually a discount and not a supply by the applicant to the supplier, no GST is leviable on the receiver on cash discount/incentive/schemes offered by the supplier to the applicant through credit note against supply without adjustment of GST.