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Delivery challan for free sample distribution

Aamir Bhai (Proprietor) (25 Points)

17 August 2019

Free samples to be distributed to some B2B dealers, Samples are marked with "NOT FOR SALE" label.

Delivery Challan will be issued instead of normal Tax Invoice, and we shall be reversing the input tax availed while filing the return.

Now the question is (1)What amount shall be displayed on Delivery Note...? Can we just write @ Rs.1/- per piece OR the amount column should left blank OR the actual saleable value with discounts. (2) GST or GST rate to be mentioned even if its supply without consideration....?

Pls comment or better to share the format.

Thanks!

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6 Replies

Pankaj Rawat (GST Practitioner) (55057 Points)
Replied 18 August 2019

Yes needs to provide Taxable amount & GST amount therein & if the value of consignment is more than 50k needs to generate the e-way also.

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Aamir Bhai (Proprietor) (25 Points)
Replied 19 August 2019

Dear Pankaj

Thanks for the response.

But GST amount to be mentioned on Delivery Notes where the Free supplies which are not marked as " FREE SAMPLES - NOT FOR SALE"

In my case The samples are marked as " NOT FOR SALE" Secondly its being sent without any consideration. And I shall be reversing the input tax already availed.

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The cutting from Cleartax.in :

. Is GST payable on “free” samples / supplies?

Free Samples – Samples can be bifurcated into two categories
1. Type 1 – Marked as samples. Eg. Pharmaceutical Companies mark certain products as Physicians Samples NOT FOR SALE
2. Type 2 – Regular Products which carry MRP and do not carry any declaration that the products are NOT FOR SALE but are issued as samples

In both the categories, the supplier is required to reverse the credit due to specific restriction of credit availment on products issued as free samples. However, wrt Type 2, since these are not marked as samples but are business assets on which credit was availed at the time of purchase, there is a possibility of these Type 2 samples being treated as Supply under Schedule I and consequently liable to GST (instead of credit reversal). GST will have to be paid based on the sale value of the “same product”.

Pankaj Rawat (GST Practitioner) (55057 Points)
Replied 19 August 2019

DEAR AAMIR

CAN YOU CLARIFY WHETHER THE SUPPLIER IS BILL FOR THESE FREE SAMPLE TO YOU......

Aamir Bhai (Proprietor) (25 Points)
Replied 19 August 2019

I am the supplier and these will not be billed for any consideration and shall be treated as free supplies for which a Delivery Note will be issued which will be attached along with the packet being sent through registered courier.

The samples being sent are already billed to me for which Input already claimed.

Hope its clear. Thanks

Purvi Mahadik (Associate Vice President) (22 Points)
Replied 01 November 2019

As per my understanding, Samples which are sent on DC but not received back within 6 months are considered to be part of supply and for this invoice have to be raised and GST to be paid from the date of supply (may be with interest).

Amount to be shown for such samples should be of MRP value and GST amount. DC must have Note which reads: "SAMPLE NOT FOR SALES AND DOES NOT HAVE ANY COMMERCIAL VALUE. VALUE SHOWN IS FOR TRANSPORTATION PURPOSE ONLY"

please correct me if my understanding is wrong

Thanks