Excise + VAT on FOC Material (Buy 10 Get 1 Free)

[V K]

Dear All

we have a manufacturing unit and to promote the sales we want to give FOC scheme to our customers, as Buy 10 and Get 1 Free.

Expert advice required on following points.

FOC will be billed as zero Value along with other taxable items and Sales Tax will not be paid on Zero Value products. as per statutory concerns , this is Free Sales , not Tax Free Sales and Excise Duty along with Sales Tax will be required to pay on that also.

We can sell the products on lower Value / at Cost , But can not give the same as FOC, W/o paying Tax to State Govt.

All the discounts except FOC ( given on Invoice ) can be admissible as Trade Discount, for FOC Items we can give the discounts after charging of Tax on Invoice.

States collecting Entry Tax can raise the Issue at Check post on Zero Value

Pls advice against the above points..

Regards.. Vikas kapoor

[YAGAY andSUN]

Dear Vikas,

Central Excise Duty would be paid on the FOC goods, Input Tax Credit would be burnout under the VAT Laws and Entry Tax would be paid on the deemed value (i.e. 110% of Cost +Excise Duty+ ITC reversal) in this matter.

Regards,

NeelamTaneja(Executive Consultants)

YAGAY and SUN

(Management, Business and Indirect Tax Consultants)

AI Summary

Excise duty on free goods requires payment; entry tax assessed on deemed value including cost and tax adjustments. Supplies made free of charge under a promotional scheme are subject to indirect taxes: excise duty is payable on FOC goods, input tax credit must be reversed or burned out under VAT laws, and entry tax is liable on a deemed value that aggregates cost, excise duty and ITC reversal adjustments to prevent tax avoidance by zero-valuing FOC items.