56th GST Council Recommends to Amend Post-Sale Discount Provisions
The 56th GST ( Goods and Services Tax ) Council meeting has recommended amendments to the Central Goods and Services Tax (CGST) Act, 2017 with regards to the treatment of post-sale discounts.
Currently, Section 15(3)(b)(i) of the CGST Act requires that for post-sale discounts to be excluded from the transaction value, the discount must be established under an agreement made before or at the time of supply, and it must be specifically linked to the relevant invoice.
The Council has now suggested removing this restrictive condition of previous agreements and invoice connection by omitting Section 15(3)(b)(i).
Further, the Council has proposed to amend Section 15(3)(b) to specifically provide that such post-sale discounts should be granted only through a credit note issued under Section 34 of the CGST Act.
A corresponding amendment to Section 34 has also been suggested in order to fully implement this, to assure that when a GST credit note is issued, the recipient is automatically required to reverse the proportionate Input Tax Credit (ITC) in situations where the discount has decreased the value of the supply.
