Material sent on non returnable basis
This query is : Resolved
01 September 2020
Dear Sir/Madam,
We have manufacturing unit, we need to send some material/finished goods on non returnanble basis to other vendor/supplier for
1. testing and validation
2.sample
do we need to reverse the ITC on same the same.
please guide
We have manufacturing unit, we need to send some material/finished goods on non returnanble basis to other vendor/supplier for
1. testing and validation
2.sample
do we need to reverse the ITC on same the same.
please guide
01 September 2020
Yes. GST Input Tax credit availed needs to be reduced proportionate basis for the free sample issued to vendors.
01 September 2020
if the material are sent for testing and validation on non returnable basis?
01 September 2020
Yes. Here I am assuming you are giving it for "FREE".
01 September 2020
You need not reverse ITC on the materials sent for testing and not returned IF the same get destroyed/unusable during testing process as testing is part of manufacture.However, if our reply can be clearer if you specify as to what is the material and what type of testing is done. But ITC need to be reversed for materials sent as free sample.
Message likes :
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08 September 2020
like we sent some shaft , gearbox, parts of engine for testing and validation which is non returnable .
also even if the material is returned .. its like a scrap i mean of no use. So management took the decision not to brig back the material as the cost of bringing back the parts will be additional expense.
also even if the material is returned .. its like a scrap i mean of no use. So management took the decision not to brig back the material as the cost of bringing back the parts will be additional expense.
08 September 2020
The question is whether these components get destroyed during testing process or not.If yes, then no ITC needs to be reversed.If no,then ITC may have to be reversed-depends on the circumstances of each case.
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