10 DISCOUNTS IN GST

The new provisional refund mechanism is expected to provide significant relief to manufacturers, exporters, and MSMEs where working capital gets blocked due to inverted duty structures. This reform enhances cash flow, reduces compliance burden, and strengthens ease of doing business

- By CA Gaurav Kenkre

Discounts have always been a tricky zone under GST particularly post-sale discounts. The interplay of Section 15 (valuation), Section 34 (credit notes), and the rules on ITC reversal has created a web which cannot be untangled. Recent legislative developments now aim to simplify this.

1. The Section 34 Amendment Effective from 1 October 2025 Some provisions of the Finance Act 2025 have been made effective from 1st October 2025 and one of them relates to Credit Notes. The newly inserted proviso makes it clear that a supplier can reduce output tax liability via a credit note only if the corresponding ITC, if availed, has been reversed by the recipient.

2. Withdrawal of the CA Certificate Requirement Effective from 1 October 2025 Last year's Circular 212/6/2024GST had created significant compliance noise. It required suppliers to obtain a CA or CMA certificate (or a declaration for small cases) from recipients confirming ITC reversal before availing tax reduction. This was never practical in large B2B networks with hundreds of customers, each needing certification.