Transfer Disposed off

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Rajkumar Gutti (Querist)
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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

Aashok Kumar Sharma

(Expert)
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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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