Valuation in GST

SECTION : Valuation in GST

  • Lesson Objectives

    On completion of this lesson, you will be able to understand:

    ·        value of Taxable Supply

    ·         Section 15(1) - Transaction Value

    ·         Section 15(2) – Inclusions to the Taxable Value

    ·        Section 15(3) – Exclusions to the Taxable Value

    ·        Treatment of Discounts


    Please go through the First Video of the Chapter 6.


    Value of Taxable Supply

    The Value of goods and services supplied should be identified to ascertain the tax payable as per GST law.


    The value of taxable supply of goods and services shall ordinarily be ‘the transaction value’ which is actually the price paid or payable, when the parties are not related and price is the sole consideration.


    GAT Law further elaborates various inclusions and exclusions from the ambit of transaction value. For example, the transaction value shall not include refundable deposit, discount allowed before or at the time of supply.


    Transaction Value Sec 15(1)

    Transaction value refers to the price actually paid or payable for the supply of goods and or services. Normally some conditions are applied which are….

    ·        The supplier and the recipient are not related.

    ·        Price is the sole consideration for the supply.


    It includes any amount which the supplier is liable to pay but which has been incurred by the recipient of the supply.


    ·        Where the Supplier and Recipient are related but the relationship has not influenced the price, the Transaction Value declared can be accepted as Value of Taxable Supply.

    ·        Price is the sole consideration means the supplier for the supply shall receive entire consideration only by way of the price charged by him and shall not receive any other benefit or facilities from the receiver.

    Adjustments to the Price

    The Transaction Value declared can be accepted after examining for inclusions in the GST Law. The inclusions specified could be added to Transaction Value are as follows:

    a)     Any taxes, duties, cesses, fees and charges levied under any other law(s) (other than SGST / CGST or IGST);

    b)    Any amounts paid by recipient that are obligation of supplier to pay;

    c)     Incidental Expenses, including commission and packing, charged by the supplier incurred on anything that done at the time or before supply;

    d)    Interest or late fee or penalty for delayed payment of any consideration for any supply. The time of supply in such cases will be the date on which the supplier receives such additional value.

    e)     Subsidy realized by supplier on the supply except subsidies provided by the Central Government and State Governments;


    Treatment of Discounts

    ·        Pre-supply discounts:-Pre-supply discounts allowed before or at the time of supply are not includible in the transaction value, provided it is allowed in the course of normal trade practice and has been duly recorded in the invoice.


    ·        Post-supply discounts or incentives:-Post-supply discounts or incentives are to be included in the transaction value. Unless the post-supply discount is established as per the agreement and is known at or before the time of supply and specifically linked to relevant invoice.


    ·        Input Tax Credit as is attributable to the discount on the basis of the document issued by the Supplier should be reversed by the recipient of the supply.



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