Books

Deemed Supply

Deemed Supply

What is a Deemed Supply?
In a normal business scenario, the supplier provides goods to the customer, and the customer pays consideration in return. The supplier buys the goods recovers input tax on the purchase, and later accounts for the output VAT, which is ultimately borne by the customer.

But what if there is no consideration?

Let’s suppose we have a supplier who has recovered input tax on some goods, which are then given away to the customer for free. The customer now has the goods, but no one has paid VAT on them. 

Goods or services that are bought for business purposes but are later used for private use, or used as gifts or samples, are known as deemed supplies. 

What types of deemed supplies are there?

Exceptions:
A supply will not be deemed if it satisfies any of the following conditions:



       
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