Free Issue of Material to Contractors

You are here :Home>Discussion>Free Issue of Material to Contractors
Free Issue of Material to Contractors 2017-07-28T11:54:04+00:00

GST India Forum – Goods and Services Tax (GST) in India Forums Discussion Free Issue of Material to Contractors

Viewing 3 posts - 1 through 3 (of 3 total)
  • Author
    Posts
  • SUNIL KUMARSUNIL KUMAR
    Participant
    Post count: 1
    Topics: 1
    Replies: 0
    Been thanked: 0 times
    #2445 |

    Sir,

    We are a listed company dealing with contractors for various civil works for which we give free materials (Like cement, steel, other spares) to vendor for execution of the work.

    As per clarifications, FREE SAMPLES are not subject to GST.
    In addition, according to the Schedule-1 (2 ) of CGST Act 2017 “Supply of goods or services or both between related persons or between distinct persons as specified in section 25, when made in the course or furtherance of business” without consideration also treated as SUPPLY.

    From the above provision, we could not clearly understand whether the independent contractor, to whom material was issued for free, falls with in the purview of the said clause or not.

    Rashmi KaliaRashmi Kalia
    Participant
    Post count: 3
    Topics: 0
    Replies: 3
    Been thanked: 0 times

    We understand here that you are not having employer relationship with your contractor so as per schedule 1 section 7 of CGST Act 2. Supply of goods or services or both between related persons will would be treated as supply even if made without consideration.

    So I think this free supply of material to contractor will not come under purview of Supply however you need to reverse the credit availed on this material as per section 17 (5) of CGST Act

    Rashmi KaliaRashmi Kalia
    Participant
    Post count: 3
    Topics: 0
    Replies: 3
    Been thanked: 0 times

    We understand here that you are not having employer relationship with your vendor so as per schedule 1 section 7 of CGST Act 2. Supply of goods or services or both between related and distinct persons will would be treated as supply even if made without consideration.

    So I think this free supply of material to vendor will not come under purview of Supply because you both having not related and distinct person however you need to reverse the credit availed on this material as per section 17 (5) of CGST Act.

    Tell me if required any further clarifications.

Viewing 3 posts - 1 through 3 (of 3 total)

You must be logged in to reply to this topic.