VAT on free goods

[kavita agarwal]

Hello,

Is there any VAT on goods given as free of cost basis and what is the procedure of invoicing the same.?

AI Summary

VAT on free goods may not apply where no consideration exists, but input tax credits may require adjustment.
VAT does not apply to goods supplied free of cost where no consideration exists; suppliers may invoice such transfers as FOC or at a nominal value. Free issues treated as trade discounts are not assessable and do not require input tax reversal, whereas complimentary free supplies require reversal or adjustment of input tax. Warranty replacement goods supplied FOC are not liable to VAT and should be recorded via delivery challan indicating warranty replacement.