Free Supply of Goods Under GST

[nirmal dutta]

Respected Sir / Madam

We are into business of manufacturing Detergent Powder meant for daily basis use of common people. We frame many promotional schemes to consumer's, retailers, dealers, etc to compete & survive in the market.

Promotional items are given to motivate them on fulfillment of terms of the schemes. The schemes once completed are mostly given in Kinds. We purchase these Schemes items for distribution to our Consumers & Sellers. Also our products are mostly designed with consumers's offer i.e. coupon's mentioning items are inserted in the Detergent packets. Once a consumer buyes & opens a packet they get the coupon & collects the mentioned item from of Sellers.

We want to know that whether we are eligible of Input Tax credit on the purchase of such items.

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AI Summary

Detergent Manufacturer's ITC on Free Promotional Items Denied Under Section 17(5)(h) of CGST Act; Dealer Schemes Uncertain A business manufacturing detergent powder inquires about eligibility for Input Tax Credit (ITC) on promotional items given to consumers and sellers under various schemes. The consensus among respondents is that ITC is not permissible for goods distributed for free, as per Section 17(5)(h) of the CGST Act. While one respondent suggests that ITC might be possible for dealer-related schemes, the general view aligns with the exclusion clause regarding free samples. Further reading on discount and promotion schemes is recommended to understand ITC eligibility better.