Скачать или смотреть GST Circular No. 251 clarifies treatment of secondary/post-sale discounts and related tax issues.

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New Circular No. 251/08/2025-GST. The circular addresses industry queries regarding how post-sale or secondary discounts should be treated for GST purposes. Key clarifications are:

Input Tax Credit (ITC) on Discounts via Credit Notes

When suppliers issue financial/commercial credit notes (without GST adjustment), the original transaction value and tax liability remain unchanged.

Therefore, recipients can retain full ITC, without reversal, since tax charged is not reduced.

Post-Sale Discounts as Consideration

Discounts given by manufacturers to dealers are generally for competitive pricing and reducing sale price.

Such discounts are not considered as “consideration” for inducement of further supply, as dealer–manufacturer sales are on a principal-to-principal basis.

Exception: If the manufacturer has an arrangement with the end customer to supply at a discounted rate (through dealer), then such discounts are treated as part of consideration, since they act as an inducement to supply.

Discounts vs. Promotional Services

Normal post-sale discounts are not consideration for services and thus not subject to GST.

However, if the dealer undertakes specific promotional/marketing activities (e.g., advertising, co-branding, campaigns) on behalf of the manufacturer with a defined consideration, then GST will apply on such services.

Takeaway

Full ITC is allowed even if post-sale discounts are provided.

Most trade discounts are not treated as taxable consideration.

GST applies only when discounts are linked to specific, contractually agreed promotional services.