Determination of Valuation of Supply

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General Rule of Valuation

If the following two conditions are fulfilled, the value of supply of goods and/or services shall be the transaction value, that is the price actually paid or payable for the said supply:

  • supplier and the recipient of the supply are not related; and
  • price is the sole consideration for the supply.

Else, the value shall be determined in such manner as may be prescribed.

Inclusions in the value of supply:

Section 15 of the CGST Act provides that the following items shall be added to arrive at the Value of Supply on which GST shall be levied.

  • any taxes, duties, cesses, fees and charges levied under any statute, other than the SGST/CGST and the Goods and Services Tax (Compensation to the States for Loss of Revenue) Act, 2016, if charged separately by the supplier to the recipient;
  • any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods and/or services;
  • incidental expenses, such as, commission and packing, charged by the supplier to the recipient of a supply, including any amount charged for anything done by the supplier in respect of the supply of goods and/or services at the time of, or before delivery of the goods or, as the case may be, supply of the services;
  • interest or late fee or penalty for delayed payment of any consideration for any supply; and
  • subsidies directly linked to the price excluding subsidies provided by the Central and State governments. The amount of subsidy shall be included in the value of supply of the supplier who receives the subsidy.

Discounts shall not be included in the valu in following cases:

Value in case of certain suppliers

In case of certain service providers an alternate mode of valuation is provided in the rules which is discussed as under:

Supplier Services Effective Value
Money Changer Services in relation to purchase or sale of foreign currency for an amount upto rupees 100,000 1% of the gross amount of currency exchanged subject to a minimum amount of two hundred and fifty rupees
Services in relation to purchase or sale of foreign currency for an amount exceeding Rs. 100,000 but upto rupees 1000,000 Rs. 1000 + 0.5% of the gross amount of currency exchanged
Services in relation to purchase or sale of foreign currency for an amount exceeding Rs. 1000,000 Rs. 5000 + 0.1% of the gross amount of currency exchanged subject to maimum Rs 60,000
Insurance First year of Policy 25% of the premium charged from the policy holder
Subsequent years 12.5% of the premium charged from the policy holder
Air Travel Agent Domestic Travel 5% of basic fare
Foreign Travel 10% of basic fare
  • Valuation in case of dealer of Second hand goodsWhere a taxable supply is provided by a person dealing in buying and selling of second hand goods i.e. used goods as such or after such minor processing which does not change the nature of the goods and where no input tax credit has been availed on purchase of such goods, the value of supply shall be the difference between the selling price and purchase price and where the value of such supply is negative it shall be ignored.
  • Valuation of Voucher etcThe value of a token, or a voucher, or a coupon, or a stamp (other than postage stamp) which is redeemable against a supply of goods or services or both shall be equal to the money value of the goods or services or both redeemable against such token, voucher, coupon, or stamp.
  • Valuation of Services in case of notified related parties

The value of taxable services provided by notified class of service providers for supplies made between distinct persons as referred to in section 25, other than those where input tax credit is not available under sub-section (5) of section 17, shall be deemed to be NIL.

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