Comfort for Industry as govt clears air on levy of GST on promotional gives

In a chief comfort to manufacturers, distributors, marketers and direct dealers of client products, the government on Thursday clarified the quantity of tax liability and the eligibility of enter tax credit on promotional offers such as loose samples and “purchase one, get one free”.

Industry players were apprehensive approximately incre­ased litigation from tax audit government in the event that they advertised their merchandise as unfastened, beca­use of ambiguity on such gives. Now, the notification by means of the critical Board of oblique Taxes and Customs makes it clear that tax could be applicable and input tax credit score might be available for the entire bundle sold, including the free items.

Professionals stated the rationalization will bring ease of advertising and keep litigation problems for the enterprise, however most importantly for the FMCG and Pharma sectors whe

re such gives are commonplace.

Inside the case of free samples, consisting of those medical representatives of pharma agencies offer to doctors, they would not be taken into consideration as supply, and could now not entice tax.

For offers such as a discount of 10 per cent for a purchase of more than Rs 1,000 and of 20 per cent for a purchase of more than Rs 2,000, the discounted amount would be excluded to determine the value of supply. Such discounts are generally passed on by the supplier through credit notes.

However that is relevant simplest when the bargain is made clean at the time of deliver. when it's miles supplied after the sale, it's miles termed as secondary bargain, the discounted cost have to not be excluded to calculate the fee of supply.

“GST would be paid at the fee recovered from the customer without reversing the enter credit score. Enter  credit will best be reversed in case of 'unfastened samples' and 'items' which is especially mentioned in the regulation.”