Pay tax for FREE products henceforth
Posted on: 20/Jun/2016 2:35:13 PM
Very soon, consumers will have to pay sales tax for goods and products received for free along with other products you buy. This will be applicable from GST (Goods and Services Tax Bill) 1st of April 2017.
Offering products for free has been a practice among companies. They do it to promote their products or to dispatch all the stocks around the year end.
Taxation rules for freight service tax were issued last week. Any product that is manufactured and comes for sales is taxable regardless of whether it is a gift product, sample, buy one and get one offer, or any others.
It is mentioned that according to GST rule-3, all the products manufactured are applicable for taxing. According to part-1, this will be considered as products that are not reviewed. These will fall under taxable category in terms of sales or goods distribution. Accordingly, consumers will have to pay tax for free goods as well.
Goods and Service Tax is formed on the basis of distribution of products and services. Hence, the manufacturer or the consumer who receives the product ought to pay tax compulsorily.
Due to this rule for paying tax to such freely offered products, there will be hindrances with the pricing for marketing and sales of products. There will be significant changeover in product sample offering, said Sachin Menon, the Partner and National Head of KPMG.
According to industry experts, consumers will be bound to pay tax toward product manufacture, VAT and GST in addition.
