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VAT ON Free Goods supply in Jammu state

Manoj (16 Points)

10 May 2007

Dear Friends
One of my client a pharmaceuticals co. transfer their stock to Jammu and in Jammu C&F of this co. sold to stockist the same.
Actually co. statred a scheme that one purchase of 5 or 10 stockist will get 1 free . Can any one will suggest me whether the above free item is subject to VAT . As I think free is the parcel packet of actual sale and co. is already charged for original product also co. not charging any penny for free items . so VAT should not be levied on it.
Kindly update me.
regds
Manoj

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2 Replies

cavikas1985 (Business/Job) (30 Points)
Replied 16 May 2007

Dear I m of the view that VAT should be chsrged irrespective of whether you are getting money from the concern person or not Thanks........

finsuraj (34 Points)
Replied 22 May 2007

VAT is chargeable on sale for which consideration is one of the important constittuents. If there is no considerable, In my view there is no sale. However, generally VAT laws across various States provide that input credit is not admissible for items given free. As such in case of free issues, the proprotionate Input credit may have to be reveresed for which u may refer to the relevent provisions in applicable state. Further in case of stock transfer to other States, State VAT laws require reversal of input credit by 4% (now 3% in some States w.e.f 1stApril 2007) of value of stock transfers. As such it is better to charge some nominal amount instead of giving free. Suraj Prakash

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