TaxTMI 
TaxTMI 
Dear experts,
Whether ITC has to be reversed on export of free sample if required how to quantify it ?
Reversal of ITC on free samples exported
15 Jun 2021 
16 Replies 
11455 Views Asked by
Reversal of Input Tax Credit on free export samples may be required where no foreign exchange is realised, affecting compliance and quantification.
Whether Input Tax Credit must be reversed on export of free trade samples where no foreign exchange is realised: free samples are commonly treated as disposals attracting ITC reversal, while counter arguments stress business purpose and distinguish samples from gifts. Practically, exporters should consider an EDF waiver when no foreign exchange is earned and recognise that export incentives may be affected. There is no statutory formula for reversal; practitioners typically reverse on an actual or proportionate basis using costing data, and may challenge reversal where credited inputs are not the goods exported as samples. (AI Summary)
Whether Input Tax Credit must be reversed on export of free trade samples where no foreign exchange is realised: free samples are commonly treated as disposals attracting ITC reversal, while counter arguments stress business purpose and distinguish samples from gifts. Practically, exporters should consider an EDF waiver when no foreign exchange is earned and recognise that export incentives may be affected. There is no statutory formula for reversal; practitioners typically reverse on an actual or proportionate basis using costing data, and may challenge reversal where credited inputs are not the goods exported as samples. (AI Summary)