Difference Between Discount and Rebate

The Difference Between Discount and Rebate: these terms are normally used interchangeably in the market but these terms are different from each other in nature but used for the same purpose i.e. used for the cut in the price of the goods. So, to know the Difference Between Discount and Rebate, First of all, we have to clear the meaning of both terms. These are explained below: 

Meaning of Discount: -

The Discount is the amount that is granted by the seller of the goods and services to its buyer. It is granted for mainly two purposes i.e. for promoting the sale of goods or for receiving earlier payments. On the basis of these purposes, this term has divided into two forms, shown as below:

1. Trade discount
2. Cash Discount

1. Trade discount: -

Trade Discount means the amount of cut in the list/dealer price of goods that is granted by the seller to the buyer at the time of the deal. It is not shown in the account, Because It is granted before actual sales arise.

2. Cash Discount: -

Cash Discount means that amount of cut from the total amount of the payment receivable from the creditor or cut from the total amount payable to debtors. It is granted by the receiver to get an earlier payment of the outstanding amount. It has shown in the books of account Because Cash Discount is granted after the actual sale is done.

To know the details about the Expenses, Please check out the following link: -

https://tutorstips.com/difference-between-trade-discount-and-cash-discount/

Meaning of Rebate: -

The Rebate is that amount that is granted by the seller of the goods and services to its buyer at the time of defect detected in the goods. It is granted for giving relief to the buyer.  The defect may be of the following type:-

• Goods are not according to the sample.
• The difference in the design of the product provided by the Buyer.
• Shortage in the Quantity.
• Delay in the Supply, Etc.

Chart of Difference between Discount and Rebate: -

Basis of Difference	Discount	Rebate
Meaning	The Discount is the amount that is granted by the seller of the goods and services to its buyer.	The Rebate is that amount that is granted by the seller of the goods and services to its buyer at the time of defect detected in the goods
Types	It has two types: 1. Trade Discount 2. Cash Discount	It has no type.
Purposes	It has two purposes i.e. for promoting the sale of goods and for receiving earlier payments.	It is granted for giving relief to the buyer
Timing	It is granted at the time of deal and payment	It is granted at the time of defect detected in the goods
Treatment on the Invoice	The trade Discount has deducted from the total value of goods while preparing the Invoice and the cash discount has not deducted.	it has no treatment while preparing an invoice.
Treatment in the Financial Books.	The trade Discount has not shown in the Financial books and the cash discount has shown in the Financial Books.	It has shown in the financial books in a separate account.

Download the chart:

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The conclusion of the Difference: -

The Discount and Rebate are very different from each other as what we have discussed above. 

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