ITC on Goods distributed as free sample

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This query is : Resolved

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A new T-shirt venture distributed 135 shirts as free samples for advertising and 3 were damaged. The query asks if Input Tax Credit (ITC) can be claimed on these items. The advice given is that ITC can be claimed on the T-shirts distributed as free samples, treating them as advertisement expenses, but ITC should not be claimed on the damaged T-shirts in the GSTR 3B.

Suraj

Suraj (Querist)

16 September 2021
Dear Sir / Madam,

Mr A started new venture of dealing in Tshirts. He purchased 150 t-shirts. The seller showed the entry in his GSTR1 against GSTN of Mr. A.

On the occasion of 15th August, Mr A printed his material on T-shirts. He distributed around 135 shirts as free samples as advertisement of his business. He was able to sell 5 T-shirts. 3 T-shirts got damaged and 7 remained in hand.

Now my queries are as follows:
1) Can Mr A claim ITC on the 135 T-shirts distributed as free samples? If No, how to show this ITC in GST return??

2) Can he claim ITC on 3 damaged T-shirts? If No, how to show this ITC in GST return??

Kindly guide me,

Regards,
Suraj