Free samples & gifts is treated to be supply under GST

Distribution of free samples & gifts is treated to be supply under Goods and services tax

Q: – Whether distribution of free samples and gifts is treated to be supply under Goods and services tax ?

Ans: It is a Normal Practice among particular sections of industry & trade, Like that, pharmaceutical firm which often provide drug samples to their dealers, stockists, medical practitioners etc. without cost of any consideration. In that kind of cases, the supplier should not take Input Tax Credit as per sub section 5 of section 17 Central Goods and Services Tax 2017 & also above said transactions will not be considered to be supply as per schedule-I or the supplier should take Input Tax Credit & it will be considered to be supply as per  covered under Schedule I of the Central Goods and Services Tax 2017 (‘CGST, 2017’) (Circular no. 92/2019)

Q: – Is Distribution of free Gifts from an employer to an employee is treated to be supply under Goods and services tax?

Ans: With one exception that gifts from an employer to an employee that are valued at no more than INR 50k in a FY are not considered to be delivery of goods, services, or both. by an agent to his principal, who undertakes to accept the goods on the principal’s behalf.

Q:- Is Buy One Get One free offer: Taxability of supply under Buy One Get One free offer ?

Ans: As per Section 7(1)(a) of Central Goods and Services Tax 2017, the goods or services which are supplied free of cost (without any consideration) shall not be treated as “supply” under Goods and Services Tax (except in case of activities mentioned in Schedule I of the Central Goods and Services Tax 2017).

In cases where there is a “Buy One, Get One Free” offer, one item is given away for free and without any conditions attached. In reality, there are multiple distinct supplies being provided for a single price rather than a single delivery of free items. At the most, it can be regarded as offering 2 things for the price of one.

Taxability of such supply will be dependent upon as to whether the supply is a composite supply or a mixed supply and the rate of tax shall be determined as per the provisions of Section 8 of Central Goods and Services Tax 2017.