GST on sales promotion Archives

GST input on sales promotion - Everything you need to know Introduction Every taxpayer employs a variety of techniques to increase sales, the most common of which is a buy one, get one free promotional offer. Furthermore, a sales promotional offer may include a free sample or a bundled offer. The main question that the taxpayer has is how to treat sales promotion offers under GST or does GST apply to sales promotions. So let's understand about GST input on sales promotion under the GST (Goods and Service Tax) Act. Useful insights on GST (Goods and Service Tax) GST is an abbreviation for Goods and Services Tax. It is an indirect tax that was implemented to replace a variety of other indirect taxes such as VAT, service tax, purchase tax, excise duty, and so on. In India, GST is levied on the supply of certain goods and services. It is a single tax that applies throughout India. There are four types of GST, which are explained below: Central Goods and Services Tax (CGST): levied on intra-state supplies of goods and services. Integrated Goods and Services Tax (IGST) is levied on interstate sales of goods and services. State Goods and Services Tax (SGST): Similar to CGST, SGST is levied on the sale of goods or services within a state. Union Territory Goods and Services Tax (UTGST): UTGST is levied on the supply of goods and services in any of the country's Union Territories, including the Daman and Diu, Andaman and Nicobar Islands, Dadra and Nagar Haveli, Lakshadweep, and Chandigarh. UTGST is levied in addition to CGST. Overview of GST input on sales promotion Treatment of buy one get one free product or services In the case of buy one get one free, one product is provided for free. In reality, no individual produce is provided free of charge in the buy one get one free offer. In fact, two or more separate products are sold for a single price. Simply put, two or more products are provided for the price of one. CBIC clarified in the aforementioned circular that the taxability of a 'buy one get one free' supply is dependent on whether the supply is composite or mixed, and the rate of tax should be determined in accordance with Section 8 of the Central Goods and Services Tax Act. Input Tax Credit (ITC) - Suppliers are eligible for an input tax credit for inputs, input services, and capital goods used in the supply of goods or services, or both. GST Treatment on free samples and gifts SUPPLY - Section 7 (1) of the Central Goods and Services Tax Act defines the term "supply." According to section 7 (1) sub-clause (a), supply includes all forms of supply when agreed to be made for consideration. Thus, free samples and gifts provided without consideration are not considered supplies under GST (except for the activities mentioned in Schedule I). Input Tax Credit - Section 17 (5) (h) clearly states that ITC is not available in the case of free samples and gifts. Thus, suppliers of free samples and gifts will be unable to claim input tax credits for inputs, input services, and capital goods used in connection with free samples or gifts provided without consideration. GST calculation for secondary discounts Secondary discounts are those that are not known at the time of supply or that are offered after the supply has ended. Assume the supplier sells 5000 packets of wafers at INR 10 per packet, then reduces the price to INR 9 per packet. It has been clarified that the supplier may issue financial/commercial credit notes even if the conditions set out in section 15 (3) (b) of the Central Goods and Services Tax Act, 2017 are not met. Since this discount is unknown at the time of supply and the conditions set out in section 15 (3) (b) of the Act are not met, secondary discounts are not excluded from the value of supply. It has been clarified that there is no impact on the availability of input tax credits in the hands of the supplier. Discount Treatment under GST input on sales promotion Discount based on 'buy more, save more - In the case of 'buy more save more,' discounts are given based on volume, for example, a 10% discount is given on purchases of INR 5000 and above, and a 20% discount is given on purchases of INR 10,000 and above. These discounts are reflected on the invoice. It is clarified that such discount offered shall be excluded from determining the value of supply (provided that it meets the criteria set out in section 15 (3) of the Central Goods and Services Tax Act, 2017). Periodic/year-end stockiest discount - Generally, suppliers offer periodic/year-end discounts, such as 1% off purchases of 10,000 pieces per year and an additional 1% off purchases of 15,000 pieces per year. Such discounts are determined by the terms of the agreement signed at or before the time of supply. Such discounts are not reflected on the invoice because the percentage of discounts can only be calculated after the supply has been made or at the end of the fiscal year. In most cases, the supplier passes on such savings by issuing a credit note. It is clarified that such discount offered shall be excluded from determining the value of supply (provided that it meets the criteria set out in section 15 (3) of the Central Goods and Services Tax Act, 2017). In terms of Input Tax Credit, it has been clarified that the supplier is eligible to claim the credit for inputs, capital goods, and input services used in the supply of goods or services, or both, on such discounts. Conclusion In layman's terms, any transaction conducted during or in furtherance of business for consideration is referred to as a supply under GST. Marketing is done to increase an organization's sales. Sales promotion is an essential business function for any company. The distribution of promotional items increases the organization's sales and is thus considered a supply of goods, for which GST is levied.

For Indian Entrepreneur

For Foreign Entrepreneur

Special Entities

Tax Registrations

Other Registration

Returns

Annual Filings

Change Services

Closure

Legal Drafting

Special

Trademark

Copyright

Patent

Designing & Marketing

Blog

Overview of GST input on sales promotion

Hi, Welcome to EbizFiling!

HOME

POLICY

RELATED LINKS

CONNECT WITH US

TOP 3 READS

All need to know about Trademark infringement

LLC vs. Corporation: Start your company in US

Duties of an Auditor in a Company

Secure Payment Modes

US payroll services in India
UK Business Outsourcing Process in India
File CRF Form to change Master Data on MCA
Reply to Notice Under Section 148 of Income Tax Act
Reply to Notice u/s 143(2) of Income Tax Act for Scrutiny Assessment
Reply to Intimation Notice under section 245 of Incone Tax Act
Reply to Defective Notice u/s 139(9) of Income Tax Act
Reply to Income Tax Notice u/s 143(1)(A) for Prima Facie Adjustment
Reply to intimation notice of Section 143(1) of Income Tax Act
Reply to Income Tax Notice Under Section 133(6)
Corporate Legal Advice
LEI Code Registration
Employee Background Verification
US Business Solutions and Outsourcing Services in India
Offshore Staffing Services in India
SEO Services in India
Content Writing Services in India
Annual Filing & Book-keeping & Accounting Service for Proprietorship Firm
ITIN Registration in the USA
File Form 10BD Online under Income Tax Act
Wall Designing
Virtual Office in India
Form 15CA Online Filing – Income Tax
NGO Darpan Registration
Overseas Direct Investment (ODI) through Automatic and Approval Route
HR Hiring and Recruitment Services in India
FCRA Registration Online in India
File Form CSR 1 online
Drop-Shipping Business in India by Foreigners
OPC Registration in India by an NRI
LLP Registration in India by an NRI
Company Registration in India by an NRI
Digital Marketing Services
Business Advisory Services
Run your operations / company in India without any liabilities
Right Issue of shares / Right Offerings
Application for the Extension of Name Reservation
Company Annual Filings in XBRL filing mode in India
Payment of TDS return on purchase of property (form 26QB)
ISO Certification in India
Add A Director
Accounting and Compliance Services for Start ups, Small companies, LLP and OPC (Micro Retainership Services)
FLA Return Filing Online to RBI in India
Foreign Direct Investment through Automatic and Direct Route
Form GSTR 1
Maharashtra Professional Tax
Premium Retainership Services in India
RBI Form FC-GPR
Charge Registration on property
RBI Form FC-TRS
E-Commerce Business
Logo Design Services
CMA Report Preparation
Startup Advisory Services
Trademark Registration / Brand Registration in the USA
Trademark Registration / Brand Registration in UK
Trademark Registration / Brand Registration in Malaysia
Income tax section 80g(5) registration
12AA & 12A Registration Process
Search Report ROC
Trademark Watch Services
GSTR 9C filing by CA- GST Annual Audit due date, GSTR 9C FAQs
Tax Consultancy Services
File ROC Form DPT 3 Return of Deposits
Surrender of DIN
Trademark Registration Process
Online LLP Registration and Complete Procedure
LLP Registration Procedure – copy
LLP Registration Procedure – copy
Hire Purchase
Contract Manufacturing Agreement
Web Development Agreement
Sole Selling Agreement
Underwriting Agreement
Mortgage Deed
Agreement Appointing A Common Arbitrator
Deed of Wakf-Alal-Aulad
Specific Power of Attorney
Foreign Collaboration Agreement Drafting
Joint Venture Agreement
Non- Disclosure Agreement
Franchise Agreement
Agreement to Sell Business
Vendor’s Agreement
Exclusive Distributorship Agreement
Shareholders Agreement
Consumer Complaint Letter
Power of Attorney
Company Name Change
Appointment of Auditors
Removal/Resignation of Director
GST Cancellation
GST LUT Letter of Undertaking
Conversion from Private Limited Company to Limited Liability Partnership (LLP)
Business Plan Preparation (Project Report)
Book-Keeping & Accounting
Payroll Setup & Processing
Trademark Rectification
Trademark Opposition
Trademark Renewal
Trademark Withdrawal in India
ESI Returns
PF Returns
भारत में कंपनी पंजीकरण / रजिस्ट्रेशन
Company Registration in India
TDS Returns Revision
Removal of Charge
Modification of Charge
Creation of Charge
MOA/AOA Printing
MOA/AOA Amendment
IEC Modification
Change of Registered Office Address
Producer Company
OPC to Private Limited Company
Conversion of Sole Proprietorship to OPC
Sole Proprietorship to Partnership firm
Conversion from Proprietorship to LLP
Conversion of Proprietorship to Private Limited Company
Conversion of Public Limited Company to Private Limited Company
Private Limited Company to Public Limited
Conversion of Partnership to Private Limited Company
Conversion of LLP to Private Limited Company
Conversion of Partnership to LLP (Limited Liability partnership)
Nidhi Company
Del Credere Agreement
Lease deed
FIND GST RATE, HSN CODE & SAC CODE
Public Limited Company
MCA Companies Fresh Start Scheme
MCA LLP Settlement Scheme 2020 (LSS 2020)
DIR 3 E KYC
A Quick guide to company registration in Bangalore
Apply for FSSAI license or Food license in India
Dormant Company Status Application
Trademark Registration in India
Conversion From Registered Partnership To LLP
Conversion From Registered Partnership To Private Limited Company
Change in Registered Office of LLP
LLC Annual Compliances in Wyoming, USA
LLC Annual Compliances in Florida, USA
LLC Annual Compliances in Delaware, USA
Company Registration in Indiana
Company Registration in California
Company Registration in New Mexico
Company Registration in New York
Company Registration in Texas
Company Registration in Wyoming, USA
Register Company in Florida, USA
Company Registration in Delaware
Company Registration in USA
Company Registration in Malaysia
Company Registration in UK
Conversion of Private Limited Company to OPC
Opening a Branch in India by a Foreign Company
Nidhi Company Annual Filing
Trademark Registration in Mumbai
Private Limited Company registration in Mumbai
MicroFinance Company registration
Register a company in India from UK
Register a company in India from Germany
Register a company in India from France
Register a company in India from US
Register a company in India from Canada
Register a company in India from UAE
Register a company in India from Singapore
Register a company in India from Australia
Private Limited Company
Private Limited Company Registration
Private Limited Company Registration
Limited Liability Partnership Registration in Mumbai
Limited Liability Partnership
Secretarial Compliance Services
Revival of Struck Off Company
Limited Liability Partnership
Sole Proprietorship Firm Registration
Partnership
Hindu Undivided Family (HUF), HUF Deed
Conversion into LLP
One Person Company (OPC) Registration in Mumbai
One Person Company (OPC)
One Person Company (OPC)
One Person Company (OPC)
Non Profit Organization
Limited Liability Partnership
Indian Subsidiary
Company Registration in India- Know how to open a Company in India
Company Registration Process in India for Foreigner- Know How to Open a Company in India
International Trademark Registration Under Madrid Protocol
Trademark Registration – copy
Trademark Registration
Trademark Objections
Trademark Assignment
Copyright Application
Provisional Patent
Patent Search
Patent Registration
Surrender IEC License Online in India
Renewal of IEC License
IEC Registration in Mumbai
IEC Registration
Add/Remove a Partner in LLP
Change in DIN
Digital Signature
DIN Application
Conversion of Section 8 Company to Private Limited Company
DPIIT Startup Recognition certificate
E-Form Commencement of business certificate(form-20a)
Aadhaar Udyog Online Registration
New Form INC-22A
SSI/MSME/Udyog Aadhar Registration
PAN Application
TAN Application
GST Modification
GST Registration
EPF Registration
ESIC Registration
Change in Directorship
Increase in Authorized Capital
Change in LLP Agreement
LLP Name Change
Share Transfer & Transmission
Annual Filing For Trust in India
E-RCMC Registration under EPCES in India
APEDA (RCMC) Registration in India
ROC Annual Compliance for Producer Company
ROC Annual filing for Section 8 Company
ROC Annual filing for Public Limited Company
Annual Filing & Bookkeeping & Accounting Service for Partnership Firm
Private Limited Company Annual Filing
OPC Annual Filing
LLP Annual Filing
Strike Off Company
Strike Off LLP
Dissolution of Firms
Strike Off OPC
Appeal to CIT- File an Appeal to Commissioner to Income Tax
Reply to Scrutiny Assessment Notice u/s 143(3)
Reply to Income Tax Notice- Know How to Respond to IT Notices
Income Tax Returns
TDS Returns
GST Returns