Clarification on treatment of sales promotion scheme under GST
According to Circular No. 92/11/2019-GST dated 07th March,2019
(A) Free Samples and Gifts distributed for Sales promotion:
If free sample is distributed without any consideration then it will not qualify as supply under GST because as per section 7(1)(a) any transaction will be qualify as supply if consideration is charge for that (except in case of activities mentioned in Schedule I of the said Act). Hence, GST will not be charged on that supply.
Further, as per section 17)(5) Input tax credit is not allowed on the item which is distributed as a free sample and gift.
(B) Buy one Get one free offer:
When goods are being supplied as Buy one Get one free then it will be treated as supplying two goods for the price of one and taxability of such supply will be determined on the basis of nature of supply ( Mixed supply/composite supply) and rate shall be determined on the basis of section 8 of CGST Act.
ITC shall be available in this case.
(C) Discounts includes Buy more Save more offer:
Discount offered by supplier to customers shall be excluded to determine the vale of supply but condition defined u/s 15(3) shall be satisfied for it. ITC shall be available to supplier in such case.
(D) Secondary Discounts
Discount which are not known at the time of supply and offered after the supply. For Example Re-value of item post sales.
Secondary discounts cannot be excluded for calculation of value of supply because these are not known for valuation of supply as not complying with Section 15(3)(b) of CGST Act.
ITC availability provision shall be same in such case.
