Transfer Disposed off

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This query is : Resolved

Rajkumar Gutti (Querist)

04 March 2025 Taxable goods send to registered non related person as free sample.
My Question below
Is treated as supply?
Is required to show in GSTR- 1

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

12 August 2025 ✅ 1. Is it treated as "Supply" under GST?
✅ Yes, this is treated as a supply, even though no payment is involved.
Reason:

Under Section 7(1)(c) of the CGST Act, Schedule I treats "Supply of goods or services without consideration" as supply if it meets certain conditions.

However, sending free samples to a non-related, registered person does not fall under Schedule I, so technically it's not a "deemed supply" under law.

But here's the important twist:

As per Section 17(5)(h), input tax credit (ITC is blocked) on goods disposed of by way of gift or free samples.

Despite not being a supply under Schedule I, most taxpayers voluntarily report such dispatches to maintain inventory reconciliation and compliance visibility.

❗ So legally:
It is not a taxable supply, as there is no consideration, and recipient is not a related party.

No GST is payable.

But ITC on such goods is not allowed.

✅ 2. Is it required to show in GSTR-1?
✳️ Not mandatory to show in GSTR-1 as outward taxable supply, because:
No GST is being charged.

It’s not a supply under Section 7 read with Schedule I.

But you can show it optionally in Table 9B (for credit/debit notes) or as a nil-rated/exempted note in Table 8 (Nil-rated/exempt/non-GST supplies) if you wish to declare for record-keeping.
📝 Final Summary:
Question Answer
Is it treated as "supply"? ❌ No, if no consideration and not to related person
Is GST payable? ❌ No
Is ITC allowed on goods sent as sample? 🚫 No (blocked under Section 17(5)(h))
Report in GSTR-1? ❌ Not mandatory, but optional under Table 8 (non-taxable supplies)

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