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Free samples and gifts on which ITC was NOT taken at the time of input procurement:
ATreated as supply with deemed value
BComposition rate applicable
CNot a supply (no consideration); ITC was already blocked under Sec 17(5)(h)
DSubject to RCM
Answer & Solution
Correct answer: C. Not a supply (no consideration); ITC was already blocked under Sec 17(5)(h)
1. Free samples and gifts (without consideration, outside Sched I) are not 'supplies' under Sec 7.
2. Sec 17(5)(h) blocks ITC on goods 'disposed of by way of gift or free samples' — so any ITC originally taken must be reversed.
3. If ITC was never taken (e.g. exempt input), no further reversal needed.
_Source: ICAI BoS CA Final Paper 8, Ch 6 "Input Tax Credit", §Sec 17(5)(h)_
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