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Value of Taxable Supply of goods & services

1. Supply by unrelated parties where price is sole consideration

  • Value = Price + Taxes under any other law + amount paid by recipient on behalf of the supplier not included in price + Non-Govt Subsidies linked to price + Interest for delayed payment + Incidental expenses charges charged by supplier before/at the time of supply.
  • Following discounts are excluded:
    • Before or at the time of supply and recorded in invoice.
    • After supply if discount can be co-related to an existing contract and the corresponding invoice, and ITC on such discount is reversed by recipient.
    • Expenditure incurred as a pure agent and recovered from the recipient shall be excluded from the value, if the following conditions are satisfied :
  1. The supplier acts as a pure agent of the recipient, when he makes payment to the third party on authorization by such recipient.
  2. The payment made by the pure agent on behalf of the recipient is separately indicated in the invoice issued by the pure agent to the recipient
  3. The supplies procured by the pure agent from the third party as a pure agent of the recipient are in addition to the services he supplies on his own account.

2. Other situations

Value to be determined in order from left to right:

Sr. No. Situation Open Market value Monetary + Non-monetary consideration Value of like kind and quality 110% of cost of production / cost of acquisition Reasonable basis (Service provider can opt (5) instead of (4)
(1) (2) (3) (4) (5)
1 Price is not the sole consideration
2* Supply between distinct / related persons (excluding agents)
3* Supply through agent

*If goods intended for further supply as such by recipient, supplier may adopt value of 90% of price charged for supply of goods of like kind and quality by the recipient to his unrelated customer.

3. Value at the option of the supplier in certain situations (Rule 32)

a. Foreign currency including money changing:

i. General rule

Situation Value
Where RBI reference rate is available Selling rate / Buying rate (–) RBI Reference Rate X No. of units
RBI reference rate unavailable 1% of gross INR provided/received by supplier
Between non-INR currencies 1% of INR value of first Currency OR 1% of INR value of second Currency, whichever is lower

ii. Below option to be exercised for the whole FY if opted [Rule 32(2)(b)]:

Slab (₹ ) Value (₹ )
Upto 1 lakh 1% OR 250, whichever is higher
More than 1 lakh and upto 10 lakh 1000 + 0.5% of amount exceeding 1 lakh
Above 10 lakh 60,000 OR 5500 + 0.1% of amount exceeding 10 lakh, whichever is lower

b. Air travel bookings by travel agent [Rule 32(3)]:

Situation Value
Domestic travel 5% of basic fare
International travel 10% of basic fare

c. Life insurance business [Rule 32(4)]:

Situation Value
Amount of investment / savings intimated to policy holder in advance Gross premium charged (-) amount allocated for investment or savings
Single premium annuity policies other than above 10% of single premium
Others 25% of premium charged in the first year and 12.5% of premium charged in subsequent years
Entire premium paid by policy holder towards risk cover in life insurance Refer other valuation rules

d. Second hand goods dealers :

Situation Value
General rule – No ITC on purchases and loss to be ignored Selling price (–) Purchase price
Goods repossessed from unregistered defaulting borrower Selling price (–) purchase price of goods by defaulting borrower reduced by 5% for every full or part quarter between date of purchase and date of disposal

e. Redeemable token, voucher, coupon, stamp :

Value = Money value of the goods or services redeemable.

4. Value where amount is inclusive of GST

Tax = Value inclusive of taxes X tax rate in % / (100+ sum of tax rates in %).

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