Fate Of Freebies Under Value Added Tax (VAT)

Offering FREE GIFTS is the craze of the present day sales managers. This is one of the most successful methods used by aggressive traders to induce customers to buy their products. As this method of sales has been successfully followed since the days of the General Sales Tax Act, the traders failed to analyse the tax impact on this method in the light of implementation of Value Added Tax Act. The implementation of VAT from Ist April 2003 in fact called for the end of this practice. The traders who could not take notice of this will have to pay its price. In the following article, I have analysed the tax and financial impact of this practice in the scenario of VAT.