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Free sample distribution

02 May 2020

one medicine Co distribute sanitizer in free of cost which is purchased with gst. how can I show this in tally? what is the entry which is help to reduce the stock? gst is applicable or not on this supply?

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6 Replies

prasad Nilugal ( GST Practitioner & Accounts ) (14829 Points)
Replied 02 May 2020

Pass purchase entry of Sanitizer with GST as follows

1) Purchase A/c Dr

CGST A/c Dr

SGST A/c Dr

To Sundry Creditors A/c Cr

( Purchase of Sanitizer , Invoice No ---- Dated ----)

2) When pay for above purchase

Sundry Creditors A/c Dr

To Bank A/c Cr

( payment made with Gst to supplier )

3) when you distribute Same Sanitizer as a Free Sample entry will be

Free Sample ( Sanitizer ) A/c Dr

To Purchase A/c Cr

( Being Sanitizer Distributed as free sample )

Note - No Input Tax credit For Free Sample as per section 17(5) (h) of CGST act 2017 , if you have taken credit please reverse . Also refer circular no 92/11/2019 dated 7/3/2019 Gst on free Sample

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subharati banerjee (49 Points)
Replied 02 May 2020

Thank u sir. Is this free sample a/c made under indirect exps a/c?and this free sample distribution enty will be made excluding gst?

prasad Nilugal (3914 Points)
Replied 03 May 2020

Under Direct Expense in Trading A/c and yes excluding GST .

CA PARTH SHAH (In Practice) (1951 Points)
Replied 03 May 2020

No need to pass separate entry for selling free samples. Pass entry in Stock Journal directly for reducing the stock.

prasad Nilugal (3914 Points)
Replied 04 May 2020

Supplier has charged GST , so we have pass entry in terms of filing. return .

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(Guest)

We bill the materials each with @ Rs. 1 plus tax to customers to have a clear and proper records of inventory and accounting books. It is wrong in anyway ?