FOC SUPPLY

Supplies made by the recipient to supplier, which are either not in relation to supply or, if in relation to the supply, the supplier was not liable to be paid for by the supplier, are not includible in transaction value. For better understanding let us take following examples:

Example 1: A Limited awards contract for construction of two thousand electrical towers. Steel is major raw material for these towers. Under the contract A Limited will supply required quantity of steel to the contractor. Contractor will arrange for all other materials and deliver complete tower at designated place and time. Value of steel will not be included in taxable value for GST as the supplier was not liable to pay for the steel as per the contract.

Before explaining the provisions related to input tax credit and outward tax in point of view supplier and recipient.

whether ITC claim of such "FOC Supply",if yes than is to be consider as supply as per schedule I para 1 of cgst act 2017 and liable to pay tax even it is free of cost. ITC should be reversed of such amount and also consider in GSTR 4b.

if ITC is not claim than it is not consider as supply henc not liable to pay outward supply.

Recipient is not eligible for claim the ITC because not tax has been paid in both the case

Sir I cannot understand the meaning "ITC should be reversed of such amount and also consider in GSTR 4b."

actually I want to know ITC claim in point of supplier and receipt of Goods

 

Please read section 17(5) and schedule I of CGST Act 2017