Sir, due to unavailibility of material in market due to lockdown ,our company (service provider)is pondering the idea of supplying material to contractor from our own stock on loan basis. After 3 months material will be returned to us.(1) Can we send material on approval basis by not charging GST.(2) If not, kindly suggest a way out.
Are you talking about work contract service and supply of material in your stock to the contractor. If this is the case I will like to tell that as you are a service provider, you will not be able to justify sale on approval basis of goods that too to your own contractor.
A way out can be that you make a fresh contract wherein the material that you will provide the contractor, is mentioned separately and contracted price is reduced. In such a case the contractor upon completion / on periodic basis will invoice the amount excluding cost of such material provided by you.
However would suggest you to wait a little as it is expected that material should be available to contractor after end of lock down 3.0 i.e. 18th May, 2020 onwards.
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