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Tnvat on sample

Pankaj Jain.P (Student CA Final) (51 Points)

13 September 2016

No input tax credit shall be allowed to any registered dealer in respect of any goods purchased purchased by him for sale but given away by him by way of free sample or gift or goods consumed for personal use. What will happen if goods are imported and given as sample or gift to customer ?

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Cpprasad (CA Student) (125 Points)
Replied 15 September 2016

In Import Purchases, we dont pay Input Tax. But when we sell the goods in that state then we have to collect Output VAT (Provided if it is taxable ) . So in this case there is no consideration received as goods as the goods are distributed/ given as free samples to customers. So VAT does not attract if no consideration received, but if the dealer has taken input tax credit on the goods which are distributed as Free samples, then the dealer is not allowed to take input Tax Credit on It.He has to reverse it and becomes ineligible to take the credit.

Thanks

Cp Prasad.