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GST liability on MRP or reduced selling price?

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GST liability on MRP or reduced selling price?

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  • #193
    abhishek yadav
    Participant

    MRP of a cloth is 1600. Seller gave discount of 50 %. Now selling price comes below 1000. On what Price GST will be calculated. MRP or discounted price and one more doubt. What will be the rate. 12% or 5%.

    #220
    gstdoctor
    Keymaster

    Hi Abhishek, in your case
    MRP = 1600
    Discount = 50%
    Transaction Value = 800
    So, since GST is calculated on the transaction value and not MRP, you will have to calculate the GST on 800 Rs.
    Now since the rate of tax for value less than 800 is 5%, GST has to be charged at 5% only.

    There is one more thing that you can check, which might be a case if it is sold directly to the customer. This 800 Rs that we calculated after discount is the total money that the customer pays to the seller. So, it is Taxable Value + GST.
    In this case you should not calculate GST @5% on 800, but you should consider this 800 Rs as total amount and then calculate Taxable Value + GST

    Taxable Value (100%) + GST (5%) = 800 Rs
    105% = 800 Rs
    100% = 762 Rs
    Tax 5% = 800 – 762 = 38 Rs.

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