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Valuation in GST




Q 1.     What  is  the  value  of  taxable  supply  to  be adopted for the levy of GST?

Ans.  The value of taxable supply of goods and services shall ordinarily be ‘the transaction value’ which is the price paid or payable, when the parties are not related and price is the sole consideration. Section 15 of the CGST/SGST Act further elaborates various     inclusions     and exclusions from the ambit  of transaction  value.  For example,  the transaction value shall not include refundable deposit, discount allowed subject to certain conditions before or at the time of supply.

Q 2.     What is transaction value?

Ans.  Transaction value refers to the price actually paid or payable for the supply of goods and or services where the supplier and the recipient are not related and 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.

Q 3.     Are  there  separate  valuation  provisions  for CGST, SGST and IGST and for Goods and Services?

Ans.  No, section 15 is common for all three taxes and also common for goods and services.

Q 4.     Is  contract  price  not  sufficient  to  determine valuation of supply?

Ans.    Contract  price  is  more  specifically  referred  to  as ‘transaction value’ and that is the basis for computing tax.

However, when the price is influenced by factors like relationship of parties or  where  certain transactions are deemed to be supply, which do not have a price, the value has to be determined in accordance with the GST Valuation Rules.

Q 5.     Is reference to GST Valuation Rules required in all cases?

Ans.  No. Reference to GST Valuation Rules is required only in cases where value cannot be determined under sub- section (1) of Section 15.

Q 6.     Can   the   transaction   value   declared   under section 15(1) be accepted?

Ans.  Yes, it can be accepted after examining for inclusions in section 15(2). Furthermore, the transaction value can be accepted even where the supplier and recipient are related, provided the relationship has not influenced the price.

Q 7.     Whether  post-supply  discounts  or  incentives are to be included in the transaction value?

Ans.   Yes. where the post-supply discount is established as per the agreement which is known at or before the time of supply and where  such discount specifically linked to the relevant  invoice  and the recipient  has reversed input  tax credit attributable to such discount, the discount is allowed as admissible deduction under Section 15 of the model GST law.

Q 8.     Whether       pre-supply       discounts       allowed before or at the time of supply are includible in the transaction value?

Ans.    No,  provided it  is allowed in  the course of normal trade practice and has been duly recorded in the invoice.

Q 9.     When    are    the    provisions    of    the Valuation Rules applicable?

Ans.  Valuation Rules are applicable when (i) consideration either wholly or in part not in money terms; (ii) parties are related or supply by any specified category of supplier; and (iii) transaction value declared is not reliable.


Q 10.   What  are  the  inclusions  specified  in  Section 15(2) which could be added to Transaction Value?

Ans.  The inclusions specified in Section15 (2) which could be added to transaction value are as follows:

a)                 Any taxes, duties, cesses, fees and charges levied under any statute, other than the SGST/CGST Act 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;

b)                 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;

c)                  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;

d)                 Interest   or   late   fee   or   penalty   for   delayed payment of any consideration for any supply; and

e)                  Subsidies directly linked to the price excluding subsidies provided by the Central and State Government.


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2018-09-17 13:05:01
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