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...

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.