CBIC withdraws Circular on Treatment of Secondary or Post-Sales Discounts under GST [Read Circular]

The Central Board of Indirect Taxes and Customs ( CBIC ) has withdrawn Circular clarifying Treatment of Secondary of Post-Sales Discounts under Goods and Services Tax ( GST ).

In Circular issued on 3^rd October 2019 said that, the Board, in the exercise of its powers conferred by section 168(1) of the Central Goods and Services Tax Act, 2017, has withdrawn, ab-initio, Circular No. 105/24/2019-GST dated 28.06.2019.

Earlier Circular had clarified that, “if the post-sale discount is given by the supplier of goods to the dealer without any further obligation or action required at the dealer’s end, then the post-sales discount given by the said supplier will be related to the original supply of goods and it would not be included in the value of supply, in the hands of supplier of goods, subject to the fulfilment of provisions of sub-section (3) of section 15 of the CGST Act. However, if the additional discount given by the supplier of goods to the dealer is the post-sale incentive requiring the dealer to do some act like undertaking special sales drive, advertisement campaign, exhibition etc., then such transaction would be a separate transaction and the additional discount will be the consideration for undertaking such activity and therefore would be in relation to supply of service by dealer to the supplier of goods. The dealer, being the supplier of services, would be required to charge applicable GST on the value of such additional discount and the supplier of goods, being the recipient of services, will be eligible to claim an input tax credit of the GST so charged by the dealer”.

To Read the full text of the Circular CLICK HERE