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Free sample (free sale) effect under gst

Umesh (1) (174 Points)

26 May 2017

Dear Sir

If i am providing Free Sample with my products then what is effect under GST. How i can show free qty in GST invoice

e.g. if i am sailing chocolets say 100 qty i am giving 20 qty as free then how i can show 20 qty and its value in GST Invoice???

Please help me

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5 Replies

Shrihari K S (Audit Assistant) (22 Points)
Replied 26 May 2017

1. If the transaction is between the related parties, you will have to charge GST even on the free samples as well (I.e 20 quantity). Rate charged on 100 quantity shall be applied to free samples as well.
2. If the transaction is between unrelated parties, no GST needs to be charged on the free samples. Accordingly, invoice needs to be issued with value of 100 quantity. However, it may be noted that input tax credit if any availed at the time of purchase of those goods (issued as samples) needs to be reversed.

CA NEHA RAMPURIA (Taxation Consultant) (1823 Points)
Replied 26 May 2017

supply of free samples to induce customers to purchase would be in the course of business. hence would be liable to gst .

CA Rashmi Gandhi (Chartered Accountant) (86220 Points)
Replied 08 July 2017

Free Samples Promotional Items under GST with examples /articles/details.asp?mod_id=30440

manoj (officer) (24 Points)
Replied 14 July 2017

Originally posted by : Rashmi Gandhi
	Free Samples Promotional Items under GST with examples /articles/details.asp?mod_id=30440

I want to sent free sample for new customer development, what is the process, GST Need to be charge ?

Umesh V Naig (Statutory Analyst) (452 Points)
Replied 14 July 2017

Reg Free samples 2 concepts are read in the law.

1. Your free issue should not be further in the course of trade ie such free issues should not help to gain in the business/promotional free units nature then GST is free

2. If promotional free units the value should have been considered in the transactional value of the product for GST charging.

3. If the free units are to inter related person then GST is payable without any concession

4. However any free samples definitely GSTN should be declared or else it will be sale to unregistered entity