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Sample goods

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SUMIT BADYAL

526 Points Posted on 27 October 2021

hi, can we send goods as a sample with MRP printing on it?

Replies (2)

Quick Summary

This discussion clarifies the GST implications of sending sample goods, particularly those with MRP printing. It distinguishes between samples explicitly marked as 'Not For Sale' (Type 1) and regular products issued as samples without such a declaration (Type 2). In both cases, suppliers typically need to reverse input credit. However, Type 2 samples, being regular business assets, might be treated as a taxable supply under Schedule I, requiring GST payment based on the sale value of identical products.

Rama chary Rachakonda

Master in Accounts & high court Advocate

7021 Points Posted on 27 October 2021

Samples can be bifurcated into two categories

Type 1 – Marked as samples. Eg. Pharmaceutical Companies mark certain products as Physicians Samples NOT FOR SALE
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 availability on products issued as free samples. However, with respect to 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”.