No GST on post-sale discounts given by manufacturers to dealers

Post-sale discounts given by manufacturers to dealers intended solely for competitive pricing and promoting sales will not be subject to GST, the Central Board of Indirect Taxes and Customs (CBIC) said.

- OUR CORRESPONDENT

NEW DELHI:

However, GST would be payable on such discounts if the manufacturer and the dealer have entered into an agreement under which the latter conducts promotional activities like co-branding, advertising campaigns or sale drives on behalf of the manufacturer.

Issuing a circular regarding treatment of secondary or post-sale discounts under GST, the CBIC said it has received representations seeking clarifications on the issue.

When dealers receive such post-sale discounts, they may engage in promotional activities to boost sales. However, these activities ultimately enhance the sale of goods that the dealers themselves own, thereby increasing their own revenue. In this context, the discount merely reduces the sale price of the goods and is not linked to any independent service rendered to the manufacturer.