GST on post-sale discounts: CBIC clears confusion
India's top tax board (CBIC) finally settled the confusion around GST on post-sale discounts.
The big news: if a manufacturer gives a dealer a discount after the sale—using financial or commercial credit notes—it won't change the original invoice or tax amount.
So, dealers can keep their full input tax credit (ITC), with no need to reverse anything.
When to apply GST and when not to
CBIC says regular post-sale discounts are just price cuts—not extra payments for reselling—so no extra GST there.
But if dealers are getting paid for things like advertising or running promo campaigns (and it's in their contract), then GST kicks in.
Also, if manufacturers sell directly to customers at a discount and issue credit notes to dealers, that discount counts as taxable.
These rules aim to keep things fair and consistent across India.