Act: Central Goods & Service Tax Act, 2017

Circular No. 212/06/2024-GST

Date: 26^th June 2024

Background: Value of Taxable Supply is defined in Section 15 of Central Goods and Service Tax Act, 2017 specifying the values to be included and values to be excluded while computing the taxable value of the supply made by the supplier.

As per sub-section 3 of Section 15, 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
2. After the supply has been effected, if:
   • 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
   • 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.

Currently, there is no functionality available to suppliers and tax authorities on GST portal to verify whether input tax credit attributable to the said discount has been reversed or not by the recipient.  

Mechanism suggested by the Board:

1. In view of the above, till the time a functionality/ facility is made available on the common portal to enable the suppliers as well as the tax authorities to verify whether the input tax credit attributable to such discounts offered through tax credit notes has been reversed by the recipient or not, the supplier may procure a certificate from the recipient of supply, issued by the Chartered Accountant (CA) or the Cost Accountant (CMA), certifying that the recipient has made the required proportionate reversal of input tax credit at his end in respect of such credit note issued by the supplier.
2. The said CA/CMA certificate may include details such as:
   • Details of the credit notes,
   • Details of the relevant invoice number against which the said credit note has been issued,
   • Amount of ITC reversal in respect of each of the said credit notes
   • Details of the FORM GST DRC-03/ return / any other relevant document through which such reversal of ITC has been made by the recipient.
3. Wherever the amount of tax involved (CGST+SGST+IGST) is not exceeding Rs. 5 lacs, the recipient may submit an undertaking or certificate to the supplier stating that the said input tax credit attributable to such discount has been reversed by the recipient.