Free Supply of Goods Under GST

[Asked by Guest]

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

Input Tax Credit denied for goods supplied free as gifts or samples under GST, with dealer-scheme exceptions requiring assessment.
Input tax credit on promotional goods given free to end consumers is generally disallowed because the statutory exclusion for goods disposed of as gifts or free samples denies credit on purchases of coupons and promotional items. However, supplies made to dealers under target or incentive schemes may warrant separate ITC analysis based on scheme mechanics and recipient treatment; parties should examine scheme specifics and advance ruling practice to determine entitlement.