Coupons, cashbacks and platform funded discounts
Who bears the discount decides whose taxable value it reduces. Usually the answer is nobody's.
A discount reduces the value of a supply only where it satisfies Section 15(3). A discount funded by the platform, and not by the seller, is not a reduction in the seller's consideration; the seller receives the full price, part from the customer and part from the platform, and tax is payable on the full value. A cashback given by the platform to the customer is not a reduction in the seller's value either. The treatment must match on both sides, and the agreement should say who bears what.
The analysis
Identify who bears the discount. If the seller bears it and it satisfies Section 15(3), it reduces the seller's value. If the platform bears it, the seller's consideration is unchanged.
Identify what the platform receives in return. Where the platform funds a discount to promote its own volumes, the payment to the seller is part of the seller's consideration. Where the seller pays the platform for a promotional service, that is a separate supply by the platform.
Identify the document. A credit note reducing the seller's value must satisfy the statutory conditions; a settlement adjustment in the platform statement does not.
Vouchers and coupons follow the amended treatment for vouchers, where transactions in vouchers are outside supply and the taxable event is the underlying redemption.
The exposures
The seller reporting net of a platform funded discount, which under reports turnover and produces the most common marketplace notice.
The platform treating a promotional contribution as a discount, so neither party pays on that portion.
Cashbacks treated as reductions in the transaction value when they are a separate arrangement between the platform and the customer.
Loyalty points and their redemption, which require a documented position on when the supply occurs and on what value.
What to do on Monday
Record in the platform agreement who bears each type of discount, coupon and cashback.
Report on the full consideration where the platform funds the discount.
Reserve credit notes for real reductions in your own consideration.
Take a documented position on loyalty points and their redemption.
This page states the general position. A reader with a specific question on their own facts may write to the GST practice at AMLEGALS.
Write to the GST practiceQuestions we are asked on this
Does a platform funded discount reduce our taxable value?
No. You receive the full consideration, partly from the platform. Tax is payable on the full value.
Is a cashback taxable?
A cashback by the platform to the customer does not reduce the seller's value. The platform's own treatment depends on the arrangement.
Can we issue a credit note for a platform discount?
Not where you did not bear the discount. A credit note must reflect a real reduction in your consideration and satisfy Section 15(3).
How are loyalty points treated?
Take a documented position on the time and value of the underlying supply; the voucher amendment is relevant to the analysis.
Where should this be agreed?
In the platform agreement, expressly, so both parties report consistently.
In this cluster
- GST for electronic commerce operators: the complete obligation set
- Section 52 tax collection at source: collection, credit and mismatch disputes
- Section 9(5) notified services and the platform as deemed supplier
- Cloud kitchens, food delivery and the restaurant service fiction
- Ride hailing, aggregators and the driver's registration question
- Marketplace sellers: registration, warehouse states and returns
- Convenience fees, delivery charges and composite supply on platforms
- Cross border digital supplies and the OIDAR overlap
- Influencer, creator and affiliate income under GST
GST Insights is published by AMLEGALS for general information. Law stated as on 3 September 2026. Not advice on any particular set of facts; not an advertisement or a solicitation under Rule 36 of the Bar Council of India Rules. Readers with a question on their own facts may write to the GST practice of their own accord.