What is the difference between Trade Discount and Cash Discount in Tally Prime?

A Trade Discount reduces the sale/purchase price of goods directly on the invoice before tax calculation (enabled via F11 > 'Use Discount column in invoices'). A Cash Discount is given for prompt payment settlement and is recorded as a separate ledger (Discount Allowed under Indirect Expenses or Discount Received under Indirect Incomes) in Payment (F5) or Receipt (F6) vouchers.

How do I enable the discount column in Tally Prime sales or purchase vouchers?

From Gateway of Tally, press F11 (Features). Under the 'Inventory' section, set 'Use Discount column in invoices' to 'Yes' and press Ctrl+A to save. An additional 'Disc %' column will now appear on all Item Invoice vouchers.

Is GST charged before or after deducting a Trade Discount in Tally?

Under Section 15(3)(a) of the CGST Act, GST is charged on the net taxable amount AFTER deducting the trade discount, provided the discount is clearly itemized on the face of the tax invoice.

How should a post-sale turnover or cash discount be recorded under GST?

If a discount is granted after invoice issuance, the supplier must issue a Credit Note with GST reversal under Section 15(3)(b), or record it as a financial credit note / cash discount ledger without tax adjustment.

Can TrulyInvoice automate vendor invoices that have line-item discounts?

Yes. TrulyInvoice's AI OCR parses line-level rates, quantities, and trade discounts automatically, balances taxable math, and creates accurate F9 purchase vouchers directly in Tally Prime in 15 seconds.

Discount Entry in Tally Prime: Trade vs Cash Discount

In Indian commercial accounting, Trade Discounts and Cash Discounts serve completely different purposes and follow distinct GST compliance rules. Trade discounts are granted at the time of purchase or sale to incentivize order volume and directly reduce the item invoice price. Cash discounts are granted during invoice settlement to incentivize early payment. This SOP details how to configure and record both discount types in Tally Prime.

Quick Answer: How to Record Trade vs Cash Discounts in Tally Prime?

Trade Discounts are deducted directly from item invoice value (enable 'Use Discount column in invoices' in F11). Cash Discounts are recorded separately as ledger entries (Discount Allowed under Indirect Expenses or Discount Received under Indirect Incomes) in Payment or Receipt vouchers.

Trade Discount: Deducted directly on invoice (F11 > Use Discount column). GST is charged on net value.
Cash Discount: Booked as a separate ledger in Payment (F5) or Receipt (F6) vouchers during bill settlement.
TrulyInvoice automatically extracts trade discounts from vendor PDFs during purchase sync.

1. Recording Trade Discounts on Invoices (F11 Setup)

Under Section 15(3)(a) of the CGST Act, trade discounts shown on the face of the invoice are eligible for deduction from transaction value before computing GST. When recording a GST purchase entry in Tally or standard sales voucher:

Press F11 (Features) from Gateway of Tally.
Under Inventory features, set Use Discount column in invoices to Yes.
Press Ctrl+A to save the setting.
Open Sales (F8) or Purchase (F9) voucher in Item Invoice mode. If you have not created your items yet, review our guide on stock item entry in Tally Prime.
After entering the Stock Item, Quantity, and Rate, enter the discount percentage in the dedicated Disc % column. Tally recalculates the taxable amount before applying CGST/SGST or IGST.

2. Recording Cash Discounts During Payment Settlement

Cash discounts given post-sale or during payment settlement require separate ledger accounts. If the discount is granted as a post-sale commercial rebate or rate difference without immediate bill settlement, businesses usually issue a formal credit note in Tally Prime under Section 15(3)(b).

For prompt cash payment settlements, follow these steps in your payment or receipt voucher:

Create ledgers: Discount Allowed (under Indirect Expenses) for sales, or Discount Received (under Indirect Incomes) for purchases.
Open Payment (F5) or Receipt (F6) voucher.
Select the party ledger and enter the full bill amount, choosing Against Ref to mark the invoice settled.
Add the Bank or Cash ledger for the actual amount paid/received. If you are importing bank transaction files, see our bank statement to Tally converter.
Add the Discount ledger on the balancing row to record the prompt settlement discount.

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3. Summary Table: Trade Discount vs Cash Discount

Criterion	Trade Discount	Cash Discount
Timing	At the time of purchase or sale	At the time of payment settlement
GST Impact	Deducted from taxable value before tax	Taxable value unchanged; booked as financial expense/income
Tally Voucher	Purchase (F9) / Sales (F8) Disc % column	Payment (F5) / Receipt (F6) ledger line item

Next Steps: Streamline Your Accounting Workflow

Accurate discount handling protects your company against GST scrutiny and input tax credit (ITC) mismatches. To further eliminate manual accounting friction, explore our dedicated workflow automations:

Purchase Invoice Automation (F9)

Extract item rates, discounts, taxes, and sync directly to Tally Prime in 15 seconds.

Credit Note Entry in Tally Prime

Complete guide to sales return and post-invoice discount credit notes under GST.

Discount Entry in Tally Prime: Trade Discount vs Cash Discount SOP [2026]