GST Big Relief: No More CA Certificates for Post-Sale Discounts!

New Delhi: In a move that will bring a sigh of relief to businesses across India, the Central Board of Indirect Taxes and Customs (CBIC) has announced a major simplification in GST rules. On 1st October 2025, the government issued a new Circular No. 253/10/2025-GST, which completely scraps the cumbersome requirement of collecting documentary proof for post-sale discounts.

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For thousands of businesses, especially in manufacturing and distribution, this is fantastic news. The old rule, which involved getting certificates from Chartered Accountants (CA) or undertakings from customers, was a significant compliance headache. Let’s break down what the old problem was, what has changed now, and what it means for your business.

The Old, Complicated Rule.

Imagine you are a manufacturer who sells goods to a distributor. You offer them a discount later if they meet a certain sales target. This is called a post-sale or secondary discount.

Under the GST law, specifically Section 15(3)(b)(ii) of the CGST Act, you can reduce the taxable value of your original sale by the amount of this discount. This means you pay less GST. To do this, you issue a “credit note” to the distributor.

However, there was a condition. The law says that for the manufacturer (supplier) to get this GST benefit, the distributor (recipient) must reverse the corresponding Input Tax Credit (ITC) they had claimed on the original purchase.

Now, how would the tax officer know if the distributor actually reversed the ITC? To solve this, the CBIC had issued an earlier circular (No. 212/6/2024-GST on 26th June 2024). This circular created a procedural requirement:

• The supplier (you) had to prove that your customer had reversed the ITC.
• To do this, you had to collect one of two things from your customer:
  1. A certificate from a Chartered Accountant (CA) or a Cost & Management Accountant (CMA) confirming the ITC reversal.
  2. An undertaking (a written declaration) from the customer stating that they have reversed the ITC.

This process was a major jhanjhat (hassle) for businesses. Chasing thousands of distributors for these documents, paying fees for CA certificates, and managing all this paperwork was a huge administrative burden and increased the cost of compliance.

The New, Simplified Rule.

The new Circular No. 253/10/2025-GST changes everything. It’s short, simple, and powerful. It completely WITHDRAWS the old circular.

This means:

Suppliers are no longer required to collect any CA/CMA certificate or customer undertaking as proof of ITC reversal for post-sale discounts.

Yes, you read that right. The entire requirement of collecting documentary proof from your customers has been abolished.

Now, the process is simple. You just need to ensure that the basic conditions of the law (Section 15(3)(b)(ii)) are met. The responsibility of collecting proof is gone. The government is moving towards a trust-based system where it is assumed that the recipient will comply with their legal obligation to reverse the ITC. The GST department can verify this directly with the recipient during their audits.

What are the Key Benefits?

This is a game-changer for many reasons:

1. Massive Ease of Doing Business: The biggest benefit is the reduction in paperwork and administrative burden. Businesses can now focus on their core operations instead of chasing documents and managing compliance formalities.
2. Reduced Compliance Costs: No more running to CAs for certificates for every credit note. This will directly save money for businesses, especially for MSMEs who deal with a large network of dealers and distributors.
3. Uniformity Across India: The new circular ensures that the law is applied in the same way everywhere. There will be no room for confusion or different interpretations by tax officers in different states.
4. Clarity for Tax Officers: The circular makes it clear that field officers should not insist on these documents anymore. To ensure this, the Board has directed that Trade Notices will be issued to publicize these changes, so every officer on the ground is aware of the new, simplified rule.

What Should You Do Now?

As a business owner or a finance professional, you should:

• Immediately take note of this new circular.
• Inform your sales and accounting teams that they no longer need to collect these certificates or undertakings for post-sale discounts.
• Be aware that while you don’t need to collect proof, the legal requirement for the recipient to reverse the ITC still stands. The agreement between you and the recipient should still link the credit note to the relevant invoice and mention the ITC reversal condition.

In conclusion, this is a very welcome and pragmatic step by the CBIC. It shows that the government is listening to the feedback from the industry and is committed to making the GST regime simpler and more business-friendly. This move will surely boost business sentiment and reduce litigation, allowing Indian businesses to thrive.

Disclaimer: The information provided in this article is for general informational purposes only. It is based on Circular No. 253/10/2025-GST dated 1st October 2025. All information is provided in good faith; however, we make no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, or completeness of any information. This article does not constitute professional tax or legal advice. Readers are advised to consult with a qualified tax professional for advice tailored to their specific circumstances. Tax laws are subject to change, and interpretations may vary.

C.K. Gupta

Hello, I am C.K. Gupta Founder of Taxgst.in, a seasoned finance professional with a Master of Commerce degree and over 20 years of experience in accounting and finance. My extensive career has been dedicated to mastering the intricacies of financial management, tax consultancy, and strategic planning. Throughout my professional journey, I have honed my skills in financial analysis, tax planning, and compliance, ensuring that all practices adhere to the latest financial regulations. My expertise also extends to auditing, where I focus on maintaining accuracy and integrity in financial reporting. I am passionate about using my knowledge to provide insightful and reliable financial advice, helping businesses optimize their financial strategies and achieve their economic goals. At Taxgst.in, I aim to share valuable insights that assist our readers in navigating the complex world of taxes and finance with ease.