Stock Transfer price for promotional goods

[Srikanthan S]

What should be the value for stock transfer of promotional goods (unrelated to the Dealer's line of activity) which are procured centrally, stock transferred to Dealer's own premises in various States and to be given away free in those States along with Dealer's manufactured goods. If zero value is put in the stock transfer invoices, many State Checkposts detain the truck/goods; if some value is put, then also, such valuation is questioned and the goods are detained at Checkposts;

Requests views of experts...

[YAGAY andSUN]

For excise perspective the value should be Cost +10% and on the face of the invoice it must be written the samples are for free of cost and only for promotional purposes. Then VAT would be applicable. However the proportionate Input Tax Credit would be burnt out.

[Srikanthan S]

Thanks for the prompt response. In a few States, ITC is available on such promo goods in excess of 4% for the stock transfers. So, we lose 4% on stock transfer of such promo goods.

Can we show the purchase price of such promo goods in our stock transfer invoices? In the receiving States, it would be given free along with our own manufactured goods.

Also, we send such promo goods to our Factory to be bundled with our own mfrd goods (to be offered as free consumer scheme), can we show the purchase price of promo goods in stock transfer invoices? Will it impact our assessable value when the bundled stocks are cleared from our Fac?

[Ganeshan Kalyani]

Sir, in my view, promo items can be stock transferred to Dealer's manufacturing place, the transaction would be covered by Form F. Further on billing the promo items with main product the invoice will have promo line item with Zero amount along with main item value having sale value. Thus local tax is paid on local sales. Thanks.

AI Summary

Valuation of promotional goods: declare cost plus prescribed margin; VAT consequences and ITC implications follow. One expert recommends treating centrally supplied promotional goods as valued at cost plus a prescribed margin on transfer, with invoices stating samples are free for promotional purposes-this attracts VAT in the receiving State and consumes proportionate input tax credit. An alternative is to transfer to a dealer's manufacturing place under Form F and, on final billing, include the promo item as a zero-amount line while charging the main product's sale value, thereby allocating local tax on the taxable sale.