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TMI BlogClarification on various doubts related to treatment of sales promotion schemes under GSTX X X X Extracts X X X X X X X X Extracts X X X X ..... nferred under section 168 (1) of the Jammu and Kashmir Goods and Services Tax Act, 2017 (hereinafter referred to as the said Act ) hereby clarifies the issues in succeeding paragraphs. 2. It has been noticed that there are several promotional schemes which are offered by taxable persons to increase sales volume and to attract new customers for their products. Some of these schemes have been examined and clarification on the aspects of taxability, valuation, availability or otherwise of Input Tax Credit in the hands of the supplier (hereinafter referred to as the ITC ) in relation to the said schemes are detailed hereuder : A. Free samples and gifts : (i) It is a common practice among certain section of trade a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y on account of the provisions contained in Schedule-I of the said Act, the supplier would be eligible to avail of the ITC. B. Buy one get one free offer : (i) Sometimes, companies announce offers like Buy One, Get One free For example, buy one soap and get one soap free or Get one tooth brush free along with the purchase of tooth paste . As per sub-clause (a) of sub-section (1) of section 7 of the said Act, the goods or services 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). It may appear at first glance that in case of offers like buy One, Get One Free , one item is being supplied free ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce as the actual quantum of such discounts gets determined after the supply has been effected and generally at the year end. In commercial parlance such discounts are colloquially referred to as volume discounts . Such discounts are passed on by the supplier through credit notes. (iii) It is clarified that discounts offered by the suppliers to customers (including staggered discount under Buy more, save more scheme and post supply/volume discounts established before or at the time of supply) shall be excluded to determine the value of supply provided they satisfy the parameters 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 discou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issued in such cases even if the conditions laid down in clause (b) of sub-section (3) of section 15 of the said Act are not satisfied. It is hereby clarified that financial/commercial credit note(s) can be issued by the supplier even if the conditions mentioned in clause (b) of sub-section (3) of section 15 of the said Act are not satisfied. In other words, credit note(s) can be issued as a commercial transaction between the two contracting parties. (iv) 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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