If the selling price is lesser that cost price due to Credit notes. Credit notes are issued without GST component by the seller, Goods and Services Tax - GST

[chetan jhaver]

under below scenario . what is the right way of being tax compliant. PURCHASE PRICE AS PER INVOICE
basic	1260
input gst ( cgst + sgst )	352.8	(a)
TOTAL PRICE WITH GST	1613	(b)
CREDIT NOTES PERTAINING TO PURCHASE
cd @ 3%	48.39
quarterly discount @ rs. 20 per fan	20
quarterly growth discount ( variable )	18.9
annual growth discount ( variable )	18.9
free fan scheme . on 48 fans 1 fan free	33
total discounts on product	139.19	(c)
Actual purchase cost including GST	1473.81	cp = (b-c)
SELLING PRICE INCLUDING GST	1565	(d)
selling price basic	1222.65625
output gst ( cgst + sgst )	342.34375	(e)
NETT CONTRIBUTION TO GST PER PRODUCT SALE
output gst - input gst	-10.45625	(e-a)
ACTUAL GROSS MARGIN	6.18%	(d-cp)/cp*100
Points to be noted in the above scenario : - The nett contribution to output get payable per sale of the product is negative, yet the gross margin per product as per balance sheet is 6.18% as all cn is accounted for - Input gst carry forward continues to increase for every product sale which may be offset against other product sale. - Input gst is not reversed as credit notes are issued without gst and cost of availing input credit has been paid to the Seller and is in-turn received by the government.

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[DR.MARIAPPAN GOVINDARAJAN]

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