Figures published by the Scottish Government found 7,110 fewer households are claiming the reduction compared to March 2018, and almost 75,000 fewer households are claiming it compared to April 2013 when the scheme was introduced.
The scheme aims to support low-income households in Scotland by reducing their council tax liability, with the reduction worth on average around £700 per household.
Citizens Advice Scotland (CAS) said a lack of public awareness could be behind the drop and encouraged householders to check if they were eligible.
“Recent evidence that shows there is a strong lack of public awareness around eligibility for the council tax reduction scheme," said CAS spokesman Myles Fitt. "It’s therefore worrying that fewer households received reductions from their council tax bill last year, as the average amount people could be missing out on is £700 per year.
“Our network helps and advocates hundreds of thousands of people each year and we frequently see cases around council tax debt and people struggling with the cost of living general."
Scottish Government statistics show a total of 477,800 households were supported by the council tax reduction (CTR) scheme.
Of all CTR recipients in March 2019, 58% (275,800 recipients) were in one of the 30% most deprived areas in Scotland – up from 50% as of March 2017.
Just over 37% (175,240 recipients) were aged 65 or over, while 16% (78,180 recipients) were lone parents.
Glasgow City Council had the highest number of CTR recipients in March 2019 with 88,660 householders, while the lowest number was in Shetland with 1,070.
Edinburgh City Council had 33,460 recipients, while North Lanarkshire had a total of 36,330.
The total number of households receiving CTR in Scotland has fallen from 552,380 in April 2013 to 477,800 in March 2019 – a decrease of under 14% (74,580 recipients).
Statisticians outlined that in general, the fall has been gradual, but indicated that it is punctuated by small rises each January to March.
They also outlined that since April 2017, reforms to council tax and to council tax reduction exerted an upward pressure on recipient numbers.
But they said this is against a backdrop of a long-term downward trend since April 2013.
An agreement between the Scottish Government and local authorities, permitting them to raise council tax by up to 3%, is also reflected in an increase in the total income forgone between March 2017 and March 2019 of almost £191,000 per week.