VALUE OF SUPPLY

 It is the amount paid by the recipient of supply to

the supplier as consideration for the supply
 It is the figure upon which the tax is levied and
collected
 Provisions related to valuation of supply under
different circumstances and to different persons
- section 15 of the CGST Act
- CGST Act Rules,2017
Steps to calculate value of taxable
supply

4. Follow GST 5.Governmen

2. Include 3. Exclude
1. Determine rules if T.V t notify any
inclusions in deductions
the T.V cannot be other
T.V from T.V
( u/s 15(1)) determined method
(u/s 15(2)) (u/s 15(3))
(u/s(15(4)) (u/s 15(5))
STEP 1. DETERMINE TRANSACTION VALUE
Essentials or conditions for acceptance of
transaction value(T.V)

 T.V is the basis for valuation of taxable

supplies
 It is the price actually paid or payable
 Nexus between the amount received and
supply made
 Price is the sole consideration i.e, on such
consideration there is no revenue loss to the
department
 Supplier and recipient should not be related
Related person
STEP 2- INCLUSIONS IN T.V (U/S 15(2)

WHAT ARE INCLUSIONS?

Expenses Incurred
Point of delivery of
before point of delivery of supply supply

INCLUSIONS

1. TAXES EXCEPT GST

2. EXPENSES ON BEHALF OF SUPPLIER
3. INCIDENTAL EXPENSES
4. INTEREST, LATE FEE,PENALTY
5. SUBSIDIES
Sec 15(2)(a)- taxes other than GST
GST and GST cess are not part of taxable value
All other taxes , duties,cess are includible in value, if
charged separately

Example,
if the supplier of goods pays a municipal
tax in relation to the goods being
supplies, and bills the same separately ,
such tax will form part of the taxable
supply
 Sec 15(2)(b)
Amount paid by recipient on
behalf of supplier
 Ram sold goods to rahul – rs.
• Recipient – makes direct 2,50,000
payment – for liability of  Asper the contract of sale, ram
required to deliver these goods
supplier- & the supplier to premises of rahul
does not include this  Ram hires transporter for
amount in bill- it would transportation
 However, the freight paid by
form part of T.V rahul to transporter. Rs.2500
 T.V??:?

Value of supply- 2,50,000

+: Freight paid- 2500
Taxable value=2,52,500
 Incidential expenses sec 15(2)(c)
 It include :
a) Commission paid to agents
b) Packing expenses’
c) Any expenses before or at the time of delivery
d) Inspection or certification charges
e) Installation and testing charges
f) Loading and unloading expenses
QUESTION ??
Answer ??
 From the following particulars compute
the taxable value of supply:
 (1) Agreed value of supply -
Computation of Taxable Value of Supply
5,20,000
 (2) Agreed value includes the following: Agreed value of supply - 5,20,000
 (a) Cost of primary packing -10,000

 (b) Weighment and haulage -5,000

Add: Included in taxable value
a)Packing for transportation- 10,000
 (c) Engineering and designing charge- b) Agents commission
25,000 sion paid by recipient for the supplier- 15,000
 (3) Other Information's :
Insurance and transportation charges- 16,000
 (a) Safeguard packing for transportation
Taxable Value - 5,61,000
-10,000
Add. Applicable GST
(b) Agents commission paid by recipient
a) CGST @ 6% 33,660
for the supplier-15,000
b) SGST @ 6% 33,660
(c) Insurance and transportation
expenses paid by recipient for the supplier-
c) Total Value of the Bill/Invoice
16000 6,28,320
 Find out the taxable value of supply and
total amount of bill, if rate of GST 12% on
such supply.
Interest or late fee or penalty sec 15(2)(d)

 The value for a taxable supply will include not only the
base price but also the charges for the delay in payment
 A supply priced at 2,000 is made, with a credit period of
1 month for payment. thereafter interest of 12% is
charged. The payment is received after the lapse of
2months from the date of supply. The amount of 12%
p.a. (i.e., 1% per 2.000 for one month after the free credit
period is 20). Such interest will added to the value and
thus, the value of taxable supply will work out to the rs.
2020
Subsidy linked to the supply
(sec 15(2)(e))
Subsidy also be included . Subsidy is a sum of money
given to keep the price of a commodity low
Except subsidy received from central/ state government
Example : The selling price of a notebook is 50. For
notebooks sold to students in Government schools, a
company uses its CSR funds to pay the seller 30, so that
students pay only 20 per notebook. The taxable value of
the notebook will be 50, as this is a non-government
subsidy. If the same subsidy is paid by the Central
government or State Government, the taxable value of
the notebook would be 20.
 STEP 3- EXCLUSIONS FROM
T.V

Royal Biscuit Co. gives a discount of

30% on the list price to its
distributors. Thus, for a carton of
Spricebisk, in the invoice the list
price is mentioned as rs. 200, on
which a discount of 30% is given to
arrive at the final price of 140. The
taxable value is 140, as the
discount is allowed at the time of
supply and shown in
invoice
Illustration.
[Based on computation of Transaction value or value of supply by, BACKW ARD
CALCULATION).
From the following information determine taxable supply as per provisions of Section
15 of the CGST Act, 2017:
Contracted value of supply of goods (including GST @ 12%)- 12,00,000
The contracted value of supply includes the following:
(1) Cost of primary packing 32,000
(2) Cost of protective packing at recipient's request for safe transportation 15,000
(3) Design and engineering charges 73,000
Other information: (not included in value of supply )
(1) Commission paid to agent by recipient on instruction of supplier 15,000
(2) Freight and insurance charges paid by recipient on behalf of supplier 45,000
Give reasons with suitable assumptions where necessary.
Illustration
 Based on computation of value of supply or Transaction Value by
STRAIGHT
CALCULATIONS
Dhingra Ltd. has provided the following particulars relating to goods sold
by it to Arora Pvt. Ltd.

List price of the goods (exclusive of taxes and discounts) 5,00,000

Tax levied by Municipal Authority on the sale of such goods 4,000
CGST and SGST chargeable on the goods 9,550
Packing charges (not included in price above) 1,500
Dhingra Pvt. Ltd. received 3000 as a subsidy from a NGO on sale of such
goods. The price of 5,00,000 of the goods is after considering such subsidy.
Dhingra Ltd. offers 2% discount on the list price of the goods which is
recorded in the invoice for the goods. Determine the value of taxable supply
made by Dhingra Pvt. Ltd.
 llustration
Bauji purchased goods and made payment of 56000 inclusive of GST to Ram at GST 6 %and
CGST 6%, Calculate Assessable Value
 FORMAT FOR BACKWARD CALCULATION
 Cum Duty S.P. 56,000
Less : GST
CGST 6% and SGST ( 6,000)
(Rate x Cum Duty Price ie 12/112 x 56000)
Assessable / Transaction Value 50000

Ilustration
Rajesh, manufacturer, sold 20 units of goods to Shivani at a price of 5,000 (exclusive of
GST) per unit.as per business practice a trade discount 10% is being allowed. Calculate
the Transaction value and GST Payable assuming CGST and SGST is 9% each.
Price of Goods (5000 x 20) 1,00,000

Less: Trade Discount 10% of 1,00,000 (10000)

Transaction Value / Value of Supply 90000
CGST Payable (90,000 X 9%) SGST Payable (90,000 X 9%)
8,100
Illustration
Compute the Transaction value and GST Payable from the following information
Selling Price (includes IGST 10,000) 105000
Transactions not included in the above price:
Packing Cost 5000
Cost of returnable packing material 10000
Freight Charges paid on behalf of supplier 5000
 Insurance Charges on freight paid on behalf of supplier 2000
Trade Discount @ 10% of net SP.
• Rate of CGST & SGST 9% each

Selling Price of Goods (1,05,000 - 10000)

95000
Add:
Packing Cost
5000
Freight Charges
5000
Insurance Charges
2000
Less: Trade Discount @ 10% of 95,000
(9500)
Transaction Value
Valuation rules- SEC 15 (4)
Rule 27-Taxable value when consideration is not solely in money

In some cases, where consideration for a supply is not solely in money,

taxable value has to be determined as prescribed in the rules. In such
cases following values have to be taken sequentially to determine the
taxable value:
.
Illustration:
(1) Where a new phone is supplied for Rs. 20000/- along
with the exchange of an old phone and if the price of the
new phone without exchange is Rs.24000/-, the open
market value of the new phone is Rs 24000/-.
(2) Where a laptop is supplied for Rs. 40000/- along with a
barter of printer that is manufactured by the recipient and
the value of the printer known at the time of supply is Rs.
4000/- but the open market value of the laptop is not
known, the value of the supply of laptop is Rs. 44000/-
RULE 28- VALUE OF SUPPLY BETWEEN DISTINCT AND
RELATED PERSONS (EXCLUDING
AGENTS)
SEQUENCE TO BE FOLLOWED VALUE OF SUPPLY

1) If OMV is available, Value= OMV

2) If OMV is not available, Value= value of supply of like kind
and quality

3) If none of the above applies,

• first use Rule 30 Value= COP+10% COP
• if Rule 30 is not available, then use Value = value determined on Best
Rule 31 Judgement Basis

4) If goods are intended to be supplied Value= 90% of the value of like kind
further by recipient ‘as such’ and quality
RULE 29-VALUE OF SUPPLY OF GOODS
MADE OR RECEIVED THROUGH AN
AGENT
 The agent has the option to determine the value at 90% of the
price charged by him for the supply of goods of like kind and
quality to his unrelated customer .
 If the value is not determined as above , value will be determined
on the basis of price at which the like kind and quality of goods is
sold
 Illustration:
Where a principal supplies groundnut to his agent and the agent is supplying groundnuts
of like kind and quality in subsequent supplies at a price of Rs. 5000/- per quintal on the
day of supply. Another independent supplier is supplying groundnuts of like kind and
quality to the said agent at the price of Rs. 4550/- per quintal. The value of the supply
made by the principal shall be Rs. 4550/- per quintal or where he exercises the option the
value shall be 90% of the Rs. 5000/- i.e. is Rs. 4500/- per quintal.
RULE 30- VALUE OF SUPPLY OF GOODS
OR SERVICES OR BOTH BASED ON COST
 Rule 30 is used when Rule 27,28,29 does not apply.
 Value= 110% of COP

Rule 31- Residual method

RULE 31

FOR SUPPLY OF
GOODS OR FOR SUPPLY OF
SERVICES OR ONLY SERVICES
BOTH

IF VALUATION IS NOT POSSIBLE UNDER

RULE 27 TO 29

IF VALUATION IS NOT POSSIBLE UNDER RULE 27 TO 30

THEN USE RILE 31

THEN BEFORE USING RULE 30 DIRECTLY RULE 31 IS USED

RULE 32- DETERMINATION OF VALUE IN
RESPECT OF CERTAIN SUPPLIES
 1)Purchase And Sale Of Foreign Currency
AMOUNT OF CURRENCY VALUE OF SUPPLY
INVOLVED
Where one of the value exchanged is Difference between, buying or selling rate
Indian Rupees of Currency and RBI reference rate for that
currency at the time of the exchange,
multiplied by the number of units of the
currency.
If the RBI reference rate for a currency is 1% of the gross amount of INR provided or
not available received
Where neither of the currencies exchanged 1% of the least amount on converting to
is Indian Rupee INR
Second method 1% of the Gross Amount of currency
Upto ₹1,00,000 exchanged
OR
₹250, whichever is higher
Exceeding ₹1,00,000 and upto ₹10,00,000 ₹1,000 + 0.50% of the amount exceeding
100000
Exceeding ₹10,00,000 ₹5500 + 0.1% of the amount exceeding
₹10,00,000)
1. on 20th September 2018, Mr. A converted USD 100 into INR 6,500 (INR
65 per USD). RBI’s reference rate at the time of exchange was Rs. 64.
Now the value of supply will be: (65-64)*100 = INR 100. GST will be
levied on INR 100.

2. Let’s assume that USD 9000 is converted into 4500 POUNDS. RBI
reference rate at that time for USD is INR 63 per dollar, and INR 82 per
POUND. In this case, neither of the currencies exchanged is Indian Rupee.
The value of supply is determined as 1% of the least amount on converting to
INR. That is,
1. US Dollar converted into Indian Rupees = 9000$ * ₹63 = ₹5,67,000
2. UK Pound converted into Indian Rupees = £4500 * ₹82 = ₹3,69,000
Value of taxable service = 1% * 3,69,000 = ₹3,690/-

3. Mr. A, has exchanged US $ 10,000 to INR @ ₹64 per US $’.The value of

supply based on the second method will be determined as follows:
Value of currency exchanged= ₹64* $10,000 = ₹6,40,000
Upto ₹1,00,000 =₹ 1,000
For ₹5,40,000 = ₹ 2,700 (0.50% * ₹5,40,000)
Value of supply =₹ 3,700
2. AIR TRAVEL AGENT
Type of booking Value of supply
International booking 10% of the basic fare
Domestic bookings 5% of the basic fare

3. LIFE INSURANCE BUSINESS

Condition Value of supply
Policy with benefits of Risk Coverage and Gross premium – Amount allocated for
Investment investment, or savings
Single premium annuity policies 10% of single premium charged from the
policyholder
Other cases 25 % of the premium charged from the
policyholder in the first year and 12.5% of
the premium charged from policyholder in
subsequent years
policies with only risk cover the entire premium charged from the
policy holder.
4. VALUATION OF SUPPLY WHEN
SECOND-HAND GOODS ARE BOUGHT
OR SOLD
the taxable value shall be computed as follows:
 When ITC is not availed

a. Value = Selling Price – Purchase Price

b. If Selling Price is less than the Purchase Price, ignore the
negative value
Eg. A company dealing in buying and selling of second-
hand goods, purchases a second hand car m ( Original
price: ₹2 lakhs) for ₹1 lakh and after minor repairs, resell
the same for ₹1,23,000. The taxable value for supply shall
be ₹ 23,000.
5. VALUE OF TOKEN, VOUCHER, A
COUPON, OR A STAMP
 The value of such token, coupon, voucher or stamp shall
be the monetary value of such goods or service.

 Example: If a coupon is worth Rs.1500, and the

customer exchanges the coupon for goods worth
Rs.1500, the value of supply under GST law will also be
Rs. 1,500
 6)VALUE OF SUPPLY BETWEEN DISTINCT PERSONS
 The value of taxable services transacted between distinct persons
where input tax credit is available shall be NIL. Distinct persons
are those persons who are required to obtain more than 1 GST
registration as obtained or is required to obtain more than one
registration.

• Rule 33 –value of supply of services in case of pure agent

• Rule 34-Rate of exchange of currency, other than Indian rupees,
for determination of value
The rate of exchange for determination of value of taxable goods or
services or both shall be the applicable RBI reference rate for that
currency on the date of time of supply as determined in terms of section 12
or section 13 of the CGST Act.
 RULE 35-VALUE OF SUPPLY INCLUSIVE OF
INTEGRATED TAX, CENTRAL TAX, STATE TAX, UNION
TERRITORY TAX

 Value= value inclusive of tax (cum tax price)*

100/(100+rate)