Various doubts related to treatment of sales promotion scheme under GST clarified
92\/11\/2019 Dated:- 7-3-2019 CGST – Circulars \/ Ordes
GST
Circular No. 92\/11\/2019-GST
\nF. No. 20\/16\/04\/2018-GST
\nGovernment of India
\nMinistry of Finance
\nDepartment of Revenue
\nCentral Board of Indirect Taxes and Customs
\nGST Policy Wing
\nNew Delhi, Dated the 7th March, 2019
\nTo,
\nThe Principal Chief Commissioners \/ Chief Commissioners \/ Principal Commissioners \/ Commissioners of Central Tax (All)
\nThe Principal Director Generals\/Director Generals (All)
\nMadam\/Sir,
\nSubject: Clarification on various doubts related to treatment of sales promotion schemes under GST – Reg.
\nVarious representations have been received seeking clarification on issues raised with respect to tax treatment of sales promotion schemes under GST. To ensure uniformity in the implementation of the law across the field formations, the Board, in exercise of its powers conferred under section 168(1) of the Central Goods and Serv<\/p>\n
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Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n er, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. Therefore, the goods or services or both which are supplied free of cost (without any consideration) shall not be treated as 'supply' under GST (except in case of activities mentioned in Schedule I of the said Act). Accordingly, it is clarified that samples which are supplied free of cost, without any consideration, do not qualify as 'supply' under GST, except where the activity falls within the ambit of Schedule I of the said Act. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n is not an individual supply of free goods but a case of two or more individual supplies where a single price is being charged for the entire supply. It can at best be treated as supplying two goods for the price of one. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n arameters laid down in sub-section (3) of section 15 of the said Act, including the reversal of ITC by the recipient of the supply as is attributable to the discount on the basis of document (s) issued by the supplier. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n issued as a commercial transaction between the two contracting parties. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n","protected":false},"excerpt":{"rendered":" Various doubts related to treatment of sales promotion scheme under GST clarified92\/11\/2019 Dated:- 7-3-2019 CGST – Circulars \/ OrdesGSTCircular No. 92\/11\/2019-GST F. No. 20\/16\/04\/2018-GST Government of India Ministry of Finance Department of Revenue Central Board of Indirect Taxes and Customs GST Policy Wing New Delhi, Dated the 7th March, 2019 To, The Principal Chief Commissioners … Continue reading “Various doubts related to treatment of sales promotion scheme under GST clarified”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-17184","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/17184","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=17184"}],"version-history":[{"count":0,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/17184\/revisions"}],"wp:attachment":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=17184"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=17184"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=17184"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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\nii. Further, clause (h) of sub-section (5) of section 17 of the said Act provides that ITC shall not be available in respect of goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples. Thus, it is clarified that input tax credit shall not be available to the supplier on the inputs, input services and capital goods to the extent they are used in relation t<\/p>\n
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\nii. 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 the said Act.
\niii. It is also clarified that ITC shall be available to the supplier for the inputs, input services and capital goods used in relation to supply of goods or services or both as part of such offers.
\nC. Discounts including 'Buy more, save more' offers:
\ni. Sometimes, the supplier offers staggered discount to his customers (increase in discount rate with increase in purchase volume). For example- Get 10 % discount for purchases above ₹ 5000\/-, 20% discount for purchases above ₹ 10,000\/- and 30% discount for purchases above ₹ 20,000\/-. Such disc<\/p>\n
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\niv. It is further clarified that the supplier shall be entitled to avail the ITC for such inputs, input services and capital goods used in relation to the supply of goods or services or both on such discounts.
\nD. Secondary Discounts
\ni. These are the discounts which are not known at the time of supply or are offered after the supply is already over. For example, M\/s A supplies 10000 packets of biscuits to M\/s B at ₹ 10\/- per packet. Afterwards M\/s A re-values it at ₹ 9\/- per packet. Subsequently, M\/s A issues credit note to M\/s B for ₹ 1\/- per packet.
\nii. The provisions of sub-section (1) of section 34 of the said Act provides as under:
\n “Where one or more tax invoices have been issued for supply of any goods or services or both and the taxable valu<\/p>\n
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\niv. It is further clarified that such secondary discounts shall not be excluded while determining the value of supply as such discounts are not known at the time of supply and the conditions laid down in clause (b) of sub-section (3) of section 15 of the said Act are not satisfied.
\nv. In other words, value of supply shall not include any discount by way of issuance of credit note(s) as explained above in para 2 (D)(iii) or by any other means, except in cases where the provisions contained in clause (b) of sub-section (3) of section 15 of the said Act are satisfied.
\nvi. There is no impact on availability or otherwise of ITC in the hands of supplier in this case.
\n3. It is requested that suitable trade notices may be issued to publicize the contents of this Circular.
\n4. Difficulty if any, in the implementation of this Circular may be brought to the notice of the Board. Hindi version will follow.
\n(Upender Gupta)<\/p>\n
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