- The traditional supply chain system consisting of manufacturers, depots, stockiest, distributors, wholesalers, and retailers is still in existence despite the reduction in distance between manufacturers and end consumers due to e-commerce.
- In order to increase business, manufacturers provide benefits such as discounts and incentives to every participant in the supply chain, which helps improve their performances and eventually increases sales.
- This article aims to understand the GST impact of such discounts and incentives.
- The GST Act provides that GST is a levy on the supply of goods and services, and supply includes all forms of goods or services.
- For a levy of GST, there has to be an agreement for a supply to be made for consideration.
- The value at which GST would be payable is determined by the price paid or payable for the supply as per Section 15 of the GST Act.
- Discounts reflecting on the invoice are deductible from the value of the supply as per Section 15(3)(a), and discounts are allowed after effecting the supply if certain conditions are met as per Section 15(3)(b).
Source Taxguru
