free samples

[Madhavan iyengar]

Where free samples are given ( could be customers or outsiders) GST treatment

Is following treatment appropriate

a) since free samples are of finished product and presumable of fresh product GST has to be discharged on market value of the FOC product by supplier and shown in B2C in GSTR-1 ( even if given to a regd person) and requires no ITC reversal.

b) sec 17(5) (h) - reversal of ITC would apply only in case of disposal of samples, since word disposal has been used ie where the sample is of inferior quality then ITC to be reversed

AI Summary

Debate on GST for Free Samples: Market Value Taxation and Input Tax Credit Reversal under Section 17(5)(h) Discussed. A discussion on the Goods and Services Tax (GST) treatment of free samples, whether given to customers or outsiders, raised questions about whether GST should be discharged on the market value of the free product and how Input Tax Credit (ITC) should be handled. Participants debated whether ITC reversal applies only to inferior quality samples, referencing section 17(5)(h) of the GST law. Some suggested paying GST on the open market value, while others emphasized strict interpretation of section 17(5). The conversation highlighted ongoing ambiguities in GST law and the need for clear guidelines to avoid future liabilities.