Major Relief for Suppliers: CBIC Withdraws GST Circular on Evidence for Post-Sale Discounts

In a move welcomed by Indian businesses, the Central Board of Indirect Taxes and Customs (CBIC) has issued Circular No. 253/10/2025-GST on October 1, 2025, withdrawing the earlier Circular No. 212/6/2024-GST dated June 26, 2024. This decision provides much-needed relief to GST-registered suppliers by eliminating an additional compliance burden.

✅ What Has Changed?

• Old Rule (June 2024 Circular): Suppliers had to furnish specific evidence to prove that their customers (recipients) had reversed Input Tax Credit (ITC) related to post-sale discounts, as required under Section 15(3)(b)(ii) of the CGST Act.
• New Rule (October 2025 Circular): This evidence requirement is scrapped. Suppliers no longer need to follow the detailed documentation procedure previously prescribed.

The withdrawal has been issued under Section 168(1) of the CGST Act, 2017, to ensure uniformity of implementation across all field formations.

Major Relief for Suppliers: CBIC Withdraws GST Circular on Evidence for Post-Sale Discounts

The Central Board of Indirect Taxes and Customs (CBIC) has issued a significant circular, No. 253/10/2025-GST, on 1st October, 2025, that will be welcomed by the Indian business community. This circular immediately withdraws the earlier controversial Circular No. 212/6/2024-GST dated 26th June, 2024.

The withdrawal is done under the powers conferred by Section 168(1) of the Central Goods and Services Tax Act, 2017 (CGST Act), specifically to ensure uniformity in the law’s implementation across all field formations.

Key Takeaway: Compliance Procedure Scrapped

The withdrawn Circular No. 212/6/2024-GST provided clarifications on the

mechanism for suppliers to furnish evidence of compliance with the conditions specified in Section 15(3)(b)(ii) of the CGST Act.

With the issuance of the new circular, the procedure prescribed vide the aforesaid circular for providing evidence of compliance of conditions of Section 15(3)(b)(ii) shall not be required.

This effectively means that a specific, likely cumbersome, documentation or verification process previously mandated for suppliers to prove compliance with rules on post-sale discounts is now abolished.

The Context: Discounts and ITC Reversal (Section 15(3)(b)(ii))

To understand the relief, one must look at the provision concerned: Section 15(3)(b)(ii).

• Section 15 of the CGST Act governs the valuation of supply for GST purposes.
• Section 15(3)(b) specifies the conditions under which a discount given after the supply has been effected can be excluded from the taxable value.
• One crucial condition is stipulated in Section 15(3)(b)(ii): the deduction is permissible only if the Input Tax Credit (ITC) attributable to the discount has been reversed by the recipient of the supply.

💡 Illustrative Example for Indian Businesses

Consider an example of an annual volume-based incentive:

1. Original Sale: A distributor in Delhi (Supplier) sells goods worth ₹10 Lakhs to a dealer in Mumbai (Recipient), charging 18% GST (₹1.8 Lakhs). The Mumbai dealer takes ITC of ₹1.8 Lakhs.
2. Post-Sale Discount: At the end of the year, the Delhi distributor offers an incentive discount of ₹1 Lakh due to high volume purchase.
3. Compliance Challenge: To reduce their original taxable value and issue a credit note for the ₹1 Lakh discount, the Delhi distributor must ensure the Mumbai dealer reverses the corresponding ITC (i.e., 18% of ₹1 Lakh = ₹18,000).
4. The Old Circular (212/6/2024-GST) had prescribed a specific evidence procedure for the Delhi distributor to collect proof that the Mumbai dealer has actually reversed this ₹18,000 ITC in their books and GST returns. This process often led to practical difficulties and documentation burden.
5. The New Circular (253/10/2025-GST) NOW ELIMINATES THIS MANDATED EVIDENCE PROCEDURE. Suppliers are no longer required to follow the specific procedure laid down in the previous circular.

Immediate Steps for Trade and Field Formations

The circular instructs Principal Chief Commissioners and Chief Commissioners to issue suitable trade notices to publicize these contents. Businesses are requested to bring any difficulty in implementation to the notice of the Board.

This withdrawal provides a welcome simplification, removing an additional procedural step that had been introduced barely a year ago, thereby streamlining compliance related to post-sale discounts and ITC reversal.