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Tnvat on sample
No input tax credit shall be allowed to any registered dealer in respect of
any goods purchased purchased by him for sale but given away by him by way of free
sample or gift or goods consumed for personal use.
What will happen if goods are imported and given as sample or gift to customer ?
Replies (1)
In Import Purchases, we dont pay Input Tax. But when we sell the goods in that state then we have to collect Output VAT (Provided if it is taxable ) . So in this case there is no consideration received as goods as the goods are distributed/ given as free samples to customers. So VAT does not attract if no consideration received, but if the dealer has taken input tax credit on the goods which are distributed as Free samples, then the dealer is not allowed to take input Tax Credit on It.He has to reverse it and becomes ineligible to take the credit.
Thanks
Cp Prasad.
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