Post-Sale Discounts & Credit Notes under GST – A Compliance Reminder

 Post-Sale Discounts & Credit Notes under GST – A Compliance Reminder


Recently, there have been instances where the GST Department has disallowed credit notes issued for post-sale discounts – despite the clarifications given in Circular No. 178/10/2022-GST dated 03.08.2022.


👉 The common ground for such disallowance:


The Credit Notes did not contain reference to the original invoice against which they were issued.


As per Section 15(3)(b) of the CGST Act, 2017, post-sale discounts are permissible deductions only when they can be linked to the relevant supply/invoice.


Further, Rule 53(1A)(g) of the CGST Rules, 2017 mandates that a credit note must contain the "number and date of the corresponding tax invoice(s)".


⚠️ Risk: If this linkage is missing, the Department may argue that the credit note is not valid for GST purposes, leading to denial of tax adjustment.

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