Abdut & Co is engaged in manufacture of plastic items supplied 10,000 units to Khan & Co. It gave usually 1% discount in respect of supplies upto 5,000 units and 2% discount for supplies above 5,000 units to 10,0

Discount offered by suppliers to customers shall be excluded to determine the value of supply. This discount can either be given in the tax invoice itself or at later date through credit notes provided it satisfies the conditions under section 15(3) CGST Act. The conditions for providing discount after the supply has been affected are — such discount is established in terms of an agreement entered into at or before the time of such supply and specifically linked to relevant invoices; and input tax credit as is attributable to the discount on the basis of document issued by the supplier has been reversed by the recipient of the supply. In the present case, Abdul & Co can offer discount through credit note as there is already an agreement entered between the parties towards such discount. Further, Khan & Co must reverse ITC while accounting the credit note towards the discount.