The Commercial Tax Department, Govt. of Uttar Pradesh on November 07, 2025, issued a clarification on various doubts related to the treatment of secondary or post-sale discounts under GST.
The following has been clarified, namely: -
• It states that the dealers receiving post-sale or financial/commercial credit notes from suppliers shall not be required to reverse ITC, since the original transaction value and tax liability remain unchanged.
• It states that discounts given by manufacturers to dealers for competitive pricing shall not be treated as consideration for further supply, as sales between manufacturers and dealers operate on a principal-to-principal basis.
• It states that if a manufacturer has an agreement with an end customer for discounted supply, post-sale discounts given to dealers for enabling such sales will be considered part of the overall consideration.
• It states that general post-sale discounts shall not be treated as payment for services, but if dealers provide specific promotional services (advertising, co-branding, campaigns, etc.) with defined consideration, then GST will be applicable on such services.
[Notification no. - GST/2025-26/112/State Tax]
