Free of cost material exported
This query is : Resolved
25 July 2019
Dear Expert,
Our final goods are exported and we make invoice without export and will claim refund of the GST.
Now my question is that we are sending some material out of India for testing (Final Goods + some spares),
so weather we need to reverse the ITC on the said items or we should pay GST on the same items and adjust with out GST credit balance.
we are thinking to pay GST and adjust with our GST credit and the value will be as declared in the face of invoice.
Please advice.
Our final goods are exported and we make invoice without export and will claim refund of the GST.
Now my question is that we are sending some material out of India for testing (Final Goods + some spares),
so weather we need to reverse the ITC on the said items or we should pay GST on the same items and adjust with out GST credit balance.
we are thinking to pay GST and adjust with our GST credit and the value will be as declared in the face of invoice.
Please advice.
25 July 2019
No need to reverse the ITC on the said items, it's not a free supply of material where reversal is required but material sent for testing is used for business,
29 July 2019
Even then no need of reversal as it's used for business.
07 August 2019
See the link.
https://www.caclubindia.com/articles/free-supply-treatment-under-gst-provisions-30463.asp
ITC on goods which gets consumed / destroyed in testing should not be restricted as it is part of business process. If before, putting to use goods are destroyed, then credit should be restricted. There are few case laws under Central excise law which could be referred which could be useful for GST as well
https://www.caclubindia.com/articles/free-supply-treatment-under-gst-provisions-30463.asp
ITC on goods which gets consumed / destroyed in testing should not be restricted as it is part of business process. If before, putting to use goods are destroyed, then credit should be restricted. There are few case laws under Central excise law which could be referred which could be useful for GST as well
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