Free Supply

[Kaustubh Karandikar]

XYZ is having a shop cum restaurant. In the restaurant area they are giving e.g. one plate pani puri free on purchase of one plate biryani. In my view, they will be required to pay GST only on biryani and for pani puri given free, they need to reverse proportionate ITC for common credit. Is my understanding correct sir?

AI Summary

GST Debate: Should Free Pani Puri with Biryani Affect Tax and ITC Under Section 15(3)(a) of CGST Act? A discussion on a forum addressed the GST implications of a restaurant offering a free plate of pani puri with the purchase of biryani. Participants debated whether GST should be applied only to the biryani and if the input tax credit (ITC) should be reversed for the free pani puri. One participant referenced Section 15(3)(a) of the CGST Act, suggesting it is a quantity discount, while others cited various circulars and sections of the CGST Act, emphasizing the need to reverse proportionate ITC. The discussion also considered whether such offers should be treated as composite or mixed supplies.