Question 30: As per the interpretation of section 34 of CGST on the subject matter discount for incentive given after supply "Discount after supply is permissible as deduction only if it was known before or at the time of supply. Secondly, It should be recorded in invoice", if these two characteristics available discount becomes permissible. We are not sure but we feel that, section 15(3)(B)(ii) is to be applicable, in case of availment of above benefit. Is the right interpretation or not' means recipient have to reverse the ITC thereto.


Answer Yes, we agree with your interpretation. The discount will be allowed only if the ITC of corresponding value (discount value) is reversed by the receiver of supply because the output tax liability of the supplier will be reduced by the same.
Suppose value of supply is Rs 100, tax is Rs 10, ITC is availed by receiver Rs 10. Now later on discount of Rs 20 is given, then the receiver will reverse ITC of Rs 2 and liability of the supplier will be reduced by Rs 2. (reply dt. 05/25/2018)