ITC ON BUSINESS PROMOTION SCHEMES
Query (Issue) Started By: – PAWANKUMAR GARG Dated:- 25-11-2017 Last Reply Date:- 23-6-2018 Goods and Services Tax – GST
Got 8 Replies
GST
SIR
ONE OF MY CLIENT DEALS IN TRADING OF TEA AND HE GIVES BUSINESS PROMOTION SCHEMES TO THE DEALERS / CUSTOMERS. MY QUESTION IS WHETHER HE IS ELIGIBLE FOR ITC ON SCHEME ITEMS SUCH AS LED, MOBILE SET AND OTHER ELECTRONICS ITEMS.
Reply By Ganeshan Kalyani:
The Reply:
Promotion expense is done to increase the turnover of the business. Thus promotion expense incurred is in course and for furtherance of business. Hence , input tax credit is eligible. However, if any gift item is given to customer then input tax credit is not allowed.
Reply By PAWANKUMAR GARG:
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l Items if any given alongwith (not separate) with the product forms part of consideration received for the supply of product and accordingly ITC is available in those cases.
Hence each case is to be dealt as per the facts.
Reply By KASTURI SETHI:
The Reply:
We call the items free but virtually it is not free. It is an eye wash. The cost of free items are always included in the price of main product.
Reply By CS SANJAY MALHOTRA:
The Reply:
Sh. Kasturi ji,
Completely in agreement with you and hence the cost of promotional items i.e. Buy 1 Get 1 free signifies that the Sales price is for 2 products and not one. Can;t be termed as FOC supplies. Maximum it can be termed as Invoiced Qty, Discount Qty and Billed Qty for valuation.
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