Discounts do not have a specific HSN (Harmonized System of Nomenclature) code under GST because HSN codes are used to classify goods and services, not financial adjustments like discounts. However, discounts are accounted for in the calculation of taxable value for GST purposes.
Here's how discounts are treated under GST:
1. Pre-Sale Discounts: These are discounts given
before or at the time of sale and are typically mentioned on the invoice. The
value of the discount is deducted from the total amount, and GST is calculated
on the net amount.
2. Post-Sale Discounts: These are discounts given
after the sale has been completed, often through credit notes. These discounts
are allowed as deductions from the taxable value provided they are established
in terms of an agreement entered into at or before the sale and specifically
linked to relevant invoices.
When issuing a credit note for a post-sale discount, you can reference the
original HSN code for the goods or services provided.
