Scope of ‘Price linked subsidies’ under GST valuation provisions and their overlapping with ‘Purchase discounts’

Author – KRISH BHATIA, Student at CHANDIGARH UNIVERSITY

Best Citation – KRISH BHATIA, Scope of ‘Price linked subsidies’ under GST valuation provisions and their overlapping with ‘Purchase discounts’, Indian Journal of Legal Review (IJLR), 3 (1) of 2023, Pg. 563-566, ISSN – 2583-2344.

Abstract 

The scope of “price-linked subsidies” under the Goods and Services Tax (GST) valuation provisions and their overlap with “purchase discounts” is an important issue that needs to be understood by businesses and policymakers.

Price-linked subsidies are a type of financial assistance provided by the government to a manufacturer or supplier, which is linked to the price of the goods or services being supplied. These subsidies are intended to reduce the overall cost of the goods or services for the consumer and can take various forms, such as direct cash payments, tax credits, or reductions in customs duties.

Under GST provisions, price-linked subsidies are considered part of the value of the goods or services being supplied and are therefore subject to GST. However, there may be cases where the value of the subsidies is not clearly defined or is difficult to determine, which can lead to confusion and disputes over the GST liability. Purchase discounts, on the other hand, are reductions in the price of goods or services that are offered by the supplier to the purchaser. These discounts can be offered for various reasons, such as early payment or volume purchasing, and are not linked to the price of the goods or services. Purchase discounts are generally not considered part of the value of the goods or services for GST purposes, and are therefore not subject to GST