Manufacturer' discount -Reference of Guideline for Automotive Sector
As per FTA VAT Guideline on the Automotive Sector- A point discussed on Manufacturer Discount /Contengient Payments towards hitting the target.
There are 2 treatement provided eihter manufacturer should issue Credit Note and dealer should reduce the value of cars accordingly or need to issue tax invoice assuming as payments towards marketing services.
here doubt on Credit Note if it is issued and dealer reduces the value of car in the books- Is it required to pass adjustment of RCM in Box 7 because initially RCM was applied ? and if car imported in the Dec-20 while shold in June 21 hence CN will be in current month so its RCM adjustment required Secondly if yes, adjustment in in the current month of in the month of import?
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In my view it need not be adjusted in Box 7 subsequently as it can either be considered as a bulk discount not attributable to any particular import or a discount on payment settlement. Further, the value of import was already declared at the time of import based on which duties/charges were met and any subsequent reduction in price does not affect these, so a similar position can be taken for VAT incurred on the same as well. Due to lack of clarity on the exact nature of adjustments that are Mandatorily required to be made in Box 7, companies are going by their own interpretations.
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Agree with you Dear Sajith, as the FTA did not advice about its RCM adjustment hence only in the financial books, adjustment will be passed while to support in tax record, manufacturer credit note in this connection will be supportive document.
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