Sponsor artists products to wear it on some functions
My company is selling branded costume jewellery. From time to time we need to sponsor artists with our products FOC to artists under a contract with condition that the artists need to wear our products on some function.
We normally charge the products sponsored to artists to Promotion Expenses a/c (at cost).
My question is:
Is this kind of sponsorship consider DEEMED SUPPLY ? Do I need to issue a tax invoice for these producst?
Yes, it is deemed supply because the sponsorship is for the business benefit, such as to achieve advertisement purpose in the function attended by artists.
You need not to issue tax invoice because it is FOC, but need to account output tax.
PS: I think it is better to use selling price (open market value) as taxable amount to avoid trouble.