There was a long time in the minds of traders regarding the discounts given to the dealers. Will GST be charged at full price or at the rate after discount? Now the government has made it clear that if a company gives direct discount to its dealer on any goods, then GST will now be charged at the same low price. Earlier, the officers used to say that tax should be imposed at the old price, but now there will be no confusion about it. Suppose, a car company allows the dealer to sell for ₹ 18,0000 instead of ₹ 20,0000 on the old model, then GST will now be at ₹ 18,0000 only.
When will the new rule apply?
These rules will also be implemented from 22 September along with the new GST. The government had recently decided on this in the GST Council meeting. After this, CBIC i.e. Central Indirect Tax Department has also issued a circular on this. Now companies and dealers will be able to understand clearly how GST will be installed.
There will be no benefit at every discount
The thing to note is that this discount will be valid only when there is a direct agreement between the company and the dealer. That is, if the company clearly tells the dealer that it has to sell the goods at a low price and this is in writing or fixed, only then the GST will be charged at a low price. If the exemption is given through a third, such as a distributor is in the middle and is giving the same discount, then the tax will be levied at the old price. That is, till there is no direct transaction between the company and the dealer, there will be no benefit.
Old quarrel will end now
Many times there was a debate between companies and tax officials about GST. Officers used to say that whatever the discount may be, tax will be levied at full price. But the companies said that when they have sold cheaper, tax should also be levied at a low price. Now the government has resolved this issue. This will not only provide relief to the traders, but will also bring transparency in paying tax. That is, there will be no confusion or quarrel.
What should traders do?
If companies want GST to be at low prices, then they will have to make a direct and written agreement to give discounts with their dealers. So that there is no dispute later and tax can be calculated easily. KPMG India tax expert Abhishek Jain said that this decision is welcome. With this, companies, distributors and dealers will now be able to transact more clarity. Also, the old disputes that were going on for years, they will also end slowly.