GST settlement discount basis
When there is cash or settlement discount available on a sales invoice or purchase invoice, the GST on the invoice can be calculated as one of the these:
- Gross of any settlement discount and when the payment is received, a GST adjustment is made only if a discount was taken.
- Gross of any settlement discount but when the payment is received, no GST adjustment is made regardless of whether the discount was taken.
- Net of any settlement discount but when the payment is received, no GST adjustment is made regardless of whether the discount was taken.
India specifics
Offering trade and cash discounts is a built-in promotional scheme of almost every entity. Companies generally offer trade discounts to increase sales, while cash discounts are given to recover payments.
GST does not differentiate between trade and cash discounts. Instead, GST segregates the discounts into two categories:
- Discounts given before or at the time of supply
- Discounts given after the time of supply
How Infor meets the requirement
See entity tax code setup in the Tax User Guide.