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Sales promotional discount, Goods and Services Tax - GST

Issue Id: - 118737
Dated: 5-9-2023
Sales promotional discount

  • Contents

Franchisee of branded jewellary offered discount on sale to the customer out of which 50% reimbursed by the customer by crediting it in franchisee ledger. My query is what will be gst impact on such reimbursement

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Showing Replies 1 to 8 of 8 Records

Page: 1

1 Dated: 6-9-2023

Sh.Subrata Ray Ji,

Can you elaborate your query ? Your query is too brief to reply in a fool proof way.

2 Dated: 6-9-2023

Discounts are to which type, post sale or as per the sale scheme. Please clarify the transaction in detail.

3 Dated: 6-9-2023

Assessee is a franchisee of one branded jewellary. At the time sale of ornaments they are offering discount on making charges to the cudtomer. Subsequently franchisor is reimbursing 50% of discount offered to the franchisee by crediting it to the ledger of the franchisee. What will be type of discount and its gst impact if any which is reimbursed by the franchisor.

4 Dated: 7-9-2023
By:- Padmanathan Kollengode

If the franchisor is issuing a financial credit note/ commercial credit note, then it will not have any GST implication.

5 Dated: 8-9-2023

Sh.Ray Ji,

What is the basis of such huge discount to the buyer ? What are the terms and conditions to this effect in the Franchisee Agreement ? These are to be examined. If GST is effected, it will raise eyebrows of the GST Officers. It appears to me that such discount has GST effect.

There is no ceiling on percentage of discount but it must be genuine. Such discount must have solid ground.

6 Dated: 10-9-2023
By:- Shilpi Jain

The terms and conditions of the franchisee agreement in this regard would be important.

If considered as a discount to the franchise fees, by way of a discount by the franchisor, then no GST liability on the discount absorbed by the franchisor.

Many retail industries do work on this kind of model. Documentation is key in this case.

7 Dated: 10-9-2023
By:- Ganeshan Kalyani

The GST on credit note would reduce the liability and that may be questioned as regard the discount was predetermined or not at the time of supply. Levying GST on credit note is subject to conditions. If those conditions are not fulfilled then Gst cannot be charged. Then only way is to issue financial credit note.

8 Dated: 11-9-2023

nature of discount is also important. discount as per sales scheme offering by franchsior to franchisee post sales of ornaments, the option is in the hand of the franchisor either to borne the expense of GST or to reduce the amount of GST, similarly extend discounts through commercial credit notes or through GST credit notes.

Page: 1

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