All kinds of discounts such as trade discounts, cash discounts, turnover discounts etc. are treated same in GST. GST differentiates discounts as:

1. discounts given before or at the time of supply
2. after the time of supply

1. DISCOUNTS GIVEN BEFORE OR AT THE TIME OF SUPPLY

Treatment of discount in this situation is simple, discounts given before or at the time of supply are deducted from invoice value i.e., GST would be charged on discounted value.

2. DISCOUNTS GIVEN AFTER THE TIME OF SUPPLY

For discounts given after the time of supply, three conditions required to be fulfilled for discounts to be allowed as deduction from taxable value–

1. such discounts is established in terms of an agreement entered into at or before the time of supply

2. such discount is linked to specific invoice raised on the buyer

3. the input tax credit (ITC) attributable to the discount is reversed by the buyer

4. issuance of credit note for post supply discounts would result in proportionate reduction in GST component.

5. September following the end financial year in which such supply was made, or

6. date of furnishing of the relevant annual return

No reduction in output tax liability of the supplier shall be permitted if the incidence of tax and interest on such supply has been passed on to any other person.