BUY 1 FREE 1- 2 LOTIONS SELL TOGETHER WITH RM 100 BUT IT STATED “BUY 1 FREE 1”

HOW TO CAPTURE IN GST? THE FREE ONE SUBJECT TO GST?

Asked on May 4, 2018 2018-05-04 03:13:25 Business (商家)
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1 Answer(s)

Tied-in Goods :

When a person purchases goods with free tied-in goods, the value of the tied-in goods is treated as being included in the price of the principal goods supplied.

Example :

Scenario 1 : If both tied-in and the principal goods are standard-rated

Principal goods – Toothpaste (standard rate)

Tied-in goods (free item) – Toothbrush (standard rate)

Since the principal goods is a standard rated supply, GST is chargeable on the supply. If the price of the goods with the free tied-in goods is RM6.36 inclusive of GST, GST should be accounted from RM6.36 as the tied-in goods and principal goods are treated as one supply.

Price (inclusive of 6% GST) of toothpaste : RM 6.36

6% GST inclusive : RM 0.36

(RM6.36 X 6%/106%)

The registered retailer accounts for output tax of RM0.36

Scenario 2 : If the ‘tied-in goods’ is standard-rated and the principal goods is zero-rated.

Principal goods – Rice (zero rate)

Tied-in goods (free item) – plate (standard rate)

Since the principal goods is a zero rated supply, GST is not chargeable on the supply. If the price of the goods with the free tied-in goods is RM30.00, no GST is charged on RM30.00 because the principal goods is a zero rated.

Price of goods with free ‘tied-in goods’ (+0% GST): RM30.00

0% GST : RM 0

 

Answered on May 4, 2018. 2018-05-04 06:28:04
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