We are food manufacturing company. We availed ITC as part of sale promotion. We distribute free packets as sample for testing.
i) Whether GST will be payable?
ii) What will be the impact on ITC?
Section 7 of CGST Act 2017 : Scope of supply.
- (1) For the purposes of this Act, the expression “supply” includes—
(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business;
(b) import of services for a consideration whether or not in the course or furtherance of business;
(c) the activities specified in Schedule I, made or agreed to be made without a consideration; and
(d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II.
Opinion on GST Levy : No GST is payable on Sample distributed as Free Packets as no consideration is charged in this case
Section 17 of CGST Act 2017 : Apportionment of credit and blocked credits.
……..
(5) Notwithstanding anything contained in sub-section (1) of section 16 and sub- section (1) of section 18, input tax credit shall not be available in respect of the following, namely:—
(h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; and
Opinion on ITC : Proportionate ITC to has to be reversed if Sample are distributed as Free Packets
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