Target-based incentives to attract 18% GST: Maharashtra AAAR

The Maharashtra bench of the GST-Appellate Authority for Advance Rulings (AAAR) has held that the incentive earned by the reseller, from a US entity, is not in the nature of a ‘trade discount’. In other words, the reseller will have to bear a goods and services tax (GST) of 18% on such an incentive, which was based on attaining quarterly targets on eligible Intel products.

The US entity was selling goods through its distributors. The appellant MEK Peripherals, a private company purchased goods from these distributors for onward sale to retailers. It submitted to the AAAR that there is no bar under GST laws or under common law that the trade discount should flow from the immediate vendor only, as it can also flow directly from the original manufacturer (US entity).

Source:https://www.a2ztaxcorp.com/target-based-incentives-to-attract-18-gst-maharashtra-aaar/