Notification No.: 10/2017 – Central Tax
Date of Notification: 28th June 2017
Relevant Sections and Rules:
- CGST Act, 2017: Section 164
- Central Goods and Services Tax Rules, 2017: Insertion of Rules 27 to 35 under Chapter IV
- Integrated GST Act: Not directly applicable
Summary of Notification
- Introduction of Chapter IV – Determination of Value of Supply:
This notification inserts a comprehensive set of valuation rules (Rules 27 to 35) effective from 1st July 2017, laying down methods for determining the value of supplies where consideration is not wholly in money, between related/distinct persons, or through agents. It also includes residual and cost-based valuation methods. Specific methods are provided for:
- Foreign currency exchange and money changing
- Air travel agents
- Life insurance
- Second-hand goods
- Vouchers and tokens
- Services between distinct persons with ITC available (value = NIL)
- Supply between Related/Distinct Persons:
Rule 28 prescribes that such supplies must be valued based on open market value or comparable supplies, with special provisions when full ITC is available—allowing invoice value to be treated as open market value. - Agent-related Valuation (Rule 29):
Valuation between principal and agent may use open market value or 90% of end-customer supply price if goods are intended for resale. - Cost-Based and Residual Methods (Rules 30 & 31):
When value cannot be determined by earlier rules:
- Rule 30: 110% of cost of production/acquisition
- Rule 31: Any reasonable means consistent with Section 15
- Pure Agent Provisions (Rule 33):
Clarifies conditions under which reimbursements by pure agents are excluded from taxable value. - Rule 34 – Currency Exchange Rates:
Prescribes RBI reference rates for valuation when supply is in foreign currency. - Rule 35 – Inclusive Price Calculation:
Specifies formula for extracting tax component when price is inclusive of tax.
