One discount, two GST rates: how to split it on the bill

When a bill has items at different GST rates, a discount on the whole bill has to be split across the lines before tax is worked out, because each line is taxed at its own rate on its own discounted value. The usual way is pro-rata: each line takes a share of the discount in proportion to its value, then GST is charged on what is left of each line.

That sounds simple, and most guides stop there. They skip the part that trips up real bills: the shares rarely divide into whole paise, and rounding each one on its own leaves the invoice a paisa short or over. This guide covers the law, the method, a full worked example from a clothes shop, and the mistakes that cost money.

Is GST charged before or after the discount?

After the discount, provided the discount is given at or before the sale and shown on the invoice.

Section 15(1) of the CGST Act makes the taxable value the "transaction value", the price actually paid or payable. Section 15(3)(a) then says the value "shall not include any discount which is given before or at the time of the supply if such discount has been duly recorded in the invoice issued in respect of such supply".

Rule 46(k) asks every tax invoice to show the "taxable value of the supply ... taking into account discount or abatement, if any". So the discount comes off first, and GST is charged on what remains. Our guide to what a GST invoice must contain lists the other Rule 46 fields.

On a bill with one rate, that is all there is to it. ₹1,000 of goods at 5% with ₹100 off is ₹900 taxable and ₹45 GST. The problem starts when the bill mixes rates.

How do you apply a discount on items with different GST rates?

GST is charged per line, at each line's rate. A bill with a kurta at 5% and a jacket at 18% needs two taxable values, one for each rate. Rule 46(l) and (m) want the rate and the tax amount shown, so the invoice prints tax separately for each slab.

A single "₹500 off" at the bottom of the bill doesn't tell you either taxable value. You have to decide how much of the ₹500 belongs to the kurta and how much to the jacket.

The law doesn't prescribe a formula for that. The common and easily defended method is pro-rata by value: each line takes the same fraction of the discount as its share of the bill.

1. Add up the bill before the discount (after any discounts on single items).
2. For each line, share = bill discount × line value ÷ bill value.
3. Subtract each share from its line to get that line's taxable value.
4. Charge each line's GST rate on its own taxable value.

If a discount was genuinely offered on one item, such as "₹300 off the jacket", it belongs on that item's line and is not spread. Pro-rata is for discounts on the whole bill.

A worked example: one bill, 5% and 18%

A clothes shop sells a cotton kurta at ₹2,000 and a woven jacket at ₹3,200, both priced before GST, and gives ₹500 off the bill.

The rates come from the apparel slabs in force since 22 Sep 2025: ready-made clothing in chapters 61 and 62 is 5% at a sale value up to ₹2,500 a piece and 18% above that (GST Council, 56th meeting). So the kurta is 5% and the jacket is 18%. Our guide to GST on clothes in 2026 covers the slab itself.

The bill is ₹5,200. The kurta is 2,000 ÷ 5,200 of it and the jacket 3,200 ÷ 5,200.

• Kurta share: 500 × 2,000 ÷ 5,200 = ₹192.3077
• Jacket share: 500 × 3,200 ÷ 5,200 = ₹307.6923

Neither is a whole number of paise, so they have to be rounded in a way that still adds up to ₹500.00. Here, ₹192.31 and ₹307.69 do (the next section shows the method that guarantees it).

Check the maths line by line:

• Kurta GST: 1,807.69 × 5% = 90.3845, rounded to ₹90.38, split as ₹45.19 CGST and ₹45.19 SGST.
• Jacket GST: 2,892.31 × 18% = 520.6158, rounded to ₹520.62, split as ₹260.31 and ₹260.31.
• Taxable total: 1,807.69 + 2,892.31 = ₹4,700.00, which is ₹5,200 less ₹500.
• Total GST: 90.38 + 520.62 = ₹611.00. Bill total: 4,700.00 + 611.00 = ₹5,311.00.

Notice the jacket stays above ₹2,500 after its share of the discount (₹2,892.31), so it stays at 18%.

How do you round the shares so the bill adds up exactly?

Round each share on its own and you will sometimes lose or gain a paisa. Take ₹100 off a bill of three ₹300 lines. Each share is ₹33.333…, which rounds to ₹33.33, and three of those make ₹99.99. The invoice says "Discount ₹100.00" while the lines only add up to ₹99.99.

The fix is called the largest-remainder method:

1. Work in paise. Each exact share is 3,333.33 paise.
2. Take the whole-paise part of every share: 3,333 + 3,333 + 3,333 = 9,999 paise.
3. That leaves 1 paisa of the 10,000 undistributed.
4. Give leftover paise one at a time to the lines with the largest fractional parts. Here all three tie, so one line gets ₹33.34 and the other two ₹33.33.

The shares now add up to exactly ₹100.00. In the clothes example, the floors are 19,230 and 30,769 paise, which is 49,999. The single leftover paisa goes to the kurta, whose fraction (0.77) is bigger than the jacket's (0.23). That is where ₹192.31 and ₹307.69 come from.

The same idea fixes the CGST and SGST split. If the kurta's GST had come to ₹90.39, it could not be halved into whole paise, so one head would get ₹45.19 and the other ₹45.20. The two halves must always add up to the line's GST.

What goes wrong if you apply the discount after GST?

Suppose the shop instead charges GST on the full ₹5,200 and takes ₹500 off the grand total:

• GST on the list prices: 2,000 × 5% + 3,200 × 18% = 100 + 576 = ₹676.
• Total before the discount: ₹5,876. After ₹500 off: ₹5,376.

The customer pays ₹5,376, but the invoice still shows ₹676 of GST, and that is what you pay the government. The tax actually contained in ₹5,376, once the ₹500 is spread back across both lines, is only ₹618.48. You overpay ₹57.52 of GST on one bill.

The ₹618.48 is worked the same pro-rata way, starting from tax-inclusive line values of ₹2,100 and ₹3,776. The kurta takes ₹178.69 of the ₹500, leaving ₹1,921.31, of which ₹1,829.82 is taxable and ₹91.49 is GST. The jacket takes ₹321.31, leaving ₹3,454.69, of which ₹2,927.70 is taxable and ₹526.99 is GST. ₹91.49 + ₹526.99 = ₹618.48.

If your offer really is "₹500 off the final amount", that is fine. Just work the discount into each line's taxable value as above, so the tax on the bill matches what you collected. Taking money off the tax-inclusive total is the same arithmetic as extracting GST from an inclusive price.

Can a discount change an item's GST rate?

For clothes, it can. The apparel slab is set by sale value per piece, and a discount shown on the invoice reduces that value. A ₹2,700 jacket on a ₹4,000 bill with ₹600 off takes a share of 600 × 2,700 ÷ 4,000 = ₹405, leaving ₹2,295, which is below ₹2,500.

Whether a bill-level share, as against a discount on the piece itself, should be counted for the slab is not spelled out in the law, so confirm the approach with your CA before you rely on it, and see GST on clothes in 2026 for the slab rules.

What about a discount given after the sale?

A discount you agree after the bill has gone out does not go back onto that invoice. You don't edit an issued bill; you correct it with a separate document. Our guide to cancelling or correcting a wrong GST invoice covers the mechanics.

As of 18 Oct 2026, section 15(3)(b) lets a post-sale discount reduce the taxable value only if it was agreed at or before the sale and linked to the relevant invoices, and the buyer reverses the matching input tax credit (ITC, the GST a registered buyer claims back). Section 34 covers the credit note.

The Finance Act 2026 replaces clause (b) with a test based on a credit note under section 34 and links section 34 to it. CBIC's text marks both changes as not yet notified, so the old test still applies. For a shop selling to households, post-sale discounts are rare, but if you give them, ask your CA how to record them.

How Pocket Journal splits a bill discount

Pocket Journal builds the method above into the billing screen of its food app, so nobody does this on a calculator while a customer waits.

• Discount in rupees or percent. The bill discount box takes either. A percentage shows what it comes to in rupees beside the box.
• Item discounts first. A discount on one item comes off that line first. The bill discount is then split across what is left, never more than the bill.
• Pro-rata, exact to the paisa. Shares are worked in whole paise. Leftover paise go to the lines with the largest fractions, so the shares always add up to the discount. The figures in the example above are what it produces.
• Tax per line, split exactly. Each line's GST is worked at its own rate. CGST takes the lower half of an odd paisa and SGST the rest, so the two always add up to the line's tax.
• Inclusive prices handled. When a price includes GST, the discount comes off the inclusive amount and the tax is taken out of what remains.
• One rate summary. The bill prints each line's taxable value and GST rate, then CGST and SGST (or IGST) for each rate separately.

One thing to know: the printed bill shows each line's rate and its taxable value after the discount, but not a separate "Discount" row. The billing screen shows the discount; the bill doesn't yet. If your CA wants the discount spelled out on the invoice, ask them before relying on the bill as it is.