TaxTMI 
TaxTMI 
SIR
ONE OF MY CLIENT DEALS IN TRADING OF TEA AND HE GIVES BUSINESS PROMOTION SCHEMES TO THE DEALERS / CUSTOMERS. MY QUESTION IS WHETHER HE IS ELIGIBLE FOR ITC ON SCHEME ITEMS SUCH AS LED, MOBILE SET AND OTHER ELECTRONICS ITEMS.
ITC ON BUSINESS PROMOTION SCHEMES
25 Nov 2017 
8 Replies 
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Input tax credit on promotional gifts may be disallowed unless cost is included in consideration for the supply.
Eligibility for input tax credit on promotional scheme items depends on treatment of the supply: if promotional goods are treated as free samples or gifts provided without consideration, ITC must be disallowed or reversed; if the cost of the promotional item is included in the price or the item is bundled with the main supply (e.g., buy one get one) and thus forms part of consideration and invoicing, ITC may be available. (AI Summary)
Eligibility for input tax credit on promotional scheme items depends on treatment of the supply: if promotional goods are treated as free samples or gifts provided without consideration, ITC must be disallowed or reversed; if the cost of the promotional item is included in the price or the item is bundled with the main supply (e.g., buy one get one) and thus forms part of consideration and invoicing, ITC may be available. (AI Summary)