Guides · Invoicing
How discounts appear on an invoice
A discount is not just a lower price — under GST it can change the taxable value, and how it is treated depends on when it is given. A discount shown at the time of supply behaves differently from one agreed later.
Discounts given at the time of supply
A discount recorded on the invoice itself, at the time of supply, generally reduces the taxable value the tax is charged on. The buyer pays, and is taxed on, the discounted amount because that is what appears on the bill.
This is the simple case: the discount is part of the invoice, and the tax follows the net figure.
Discounts agreed after the supply
A discount agreed after the invoice — a later volume rebate, for instance — is treated differently. GST allows a post-supply discount to reduce the taxable value only where specific conditions are met, typically including that it was agreed beforehand and can be linked to the relevant invoices, often handled through a credit note.
Because the conditions are specific, a post-supply discount needs care, and the current rules should be confirmed rather than assumed.
How Lekha records discounts
Lekha records the invoice with its values as billed, and records credit notes against the bills they adjust, so a discount shown on the invoice and one handled by a later note are both captured.
Lekha records what your documents say and tracks the money on both sides — what you owe and what you are owed. It records and tracks; it does not replace your accountant.
Questions
- How does a discount at the time of supply affect tax?
- A discount shown on the invoice generally reduces the taxable value, so the tax is charged on the net, discounted amount.
- Can a discount given after the supply reduce the tax?
- Only where specific conditions are met — typically that it was agreed beforehand and can be linked to the relevant invoices, often through a credit note. Confirm the current rules.
- How is a post-supply discount usually handled?
- Commonly through a credit note against the original invoices, provided the conditions for reducing the taxable value are satisfied.
This guide is general information, not legal or tax advice. Confirm the current rules and your own circumstances for any specific case.