We are a trading company which used to give samples freely earlier to our distributors . As request for samples have increased we are planning to raise a invoice for the samples. Also to cut cost , we are making the samples in house . Do we need pay excise duty on the samples when invoiced. Also do we need to pay VAT when we are giving the samples free. Can you please help me with the excise rules & VAT rules regarding this??
11 Replies
Ajay Raghatate
(Sr Executive (Excise & Accounts))
(736 Points)
Replied 13 June 2012
As per Excise Rules Only manufacturer can pay Excise duty, so you doesn't require to pay excise duty.
If manufacturer remove their goods for sample & Testing, then they require to pay excise duty.
Sunil Kumar G
(AGM Taxation)
(373 Points)
Replied 13 June 2012
You are making samples in house, so you are the manufcuturer in this case. Do you have central Excise Registration? If you are the manufacturer, you have to pay central excise duty on samples also. But vat is not applicable for samples becuase there is no value addition.
Sonu Kumar
(Account Manager)
(665 Points)
Replied 13 June 2012
A Sample has no any Market value but it is free of cost and supplier not get any considration so in excise also it is nt taxable...
SOUMYA RANJAN PANDA,CA CS FNL,
(AUDIT ASSISTANT)
(83 Points)
Replied 13 June 2012
Mr Sonu Kumar, pls Read Rule - 4 of Central Excise valuation rule.
rgds/
Ankit Mehra
(Service)
(176 Points)
Replied 13 June 2012
Dear, as ur manufacturing samples inhouse so u have to see wether that goods are exciseable or not. If it is exciseable, then excise duty attracts. But u will fall under SSI exemption I think, so no Excise duty will be attracted in this case and no registration of excise is required.
VAT is also not attracted..
Ankit Mehra
(Service)
(176 Points)
Replied 13 June 2012
Dear, as ur manufacturing samples inhouse so u have to see wether that goods are exciseable or not. If it is exciseable, then excise duty attracts. But u will fall under SSI exemption I think, so no Excise duty will be attracted in this case and no registration of excise is required.
VAT is also not attracted..
SOUMYA RANJAN PANDA,CA CS FNL,
(AUDIT ASSISTANT)
(83 Points)
Replied 13 June 2012
| Originally posted by : Sonu Kumar | ||
 |
A Sample has no any Market value but it is free of cost and supplier not get any considration so in excise also it is nt taxable... |
 |
Mr Sonu Kumar, pls Read Rule - 4 of Central Excise valuation rule.
rgds/
Ankit Mehra
(Service)
(176 Points)
Replied 13 June 2012
Dear, as ur manufacturing samples inhouse so u have to see wether that goods are exciseable or not. If it is exciseable, then excise duty attracts. But u will fall under SSI exemption I think, so no Excise duty will be attracted in this case and no registration of excise is required.
VAT is also not attracted..
Ankit Mehra
(Service)
(176 Points)
Replied 13 June 2012
Dear, as ur manufacturing samples inhouse so u have to see wether that goods are exciseable or not. If it is exciseable, then excise duty attracts. But u will fall under SSI exemption I think, so no Excise duty will be attracted in this case and no registration of excise is required.
VAT is also not attracted..
chandra
(student)
(528 Points)
Replied 13 June 2012
Please check relevant classification for excise. Refer Central Excise Tariff Book. You are packing/repacking goods. Check if it means manufacture as defined in the Act and expanded in the relevant Tariff Chapter.
If packing/repacking goods amounts to manufacture under relevant chapter you will have to register under Central Excise and pay excise duty.
As far as VAT CST is concerned, so long as you are giving samples free, VAT / CST need not be paid as VAT CST is on sale. If you start raising Invoices and charge your customers for samples, it will amount to sale of samples and you will have to charge VAT/CST.
Sunil Kumar G
(AGM Taxation)
(373 Points)
Replied 14 June 2012
Excise duty on Samples:- Please go thru the attachment
Attached File : 791688 996307 central excise duty on samples.pdf downloaded: 170 times
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