Valuation of Supply under GST

Everyone by now knows that tax under GST will be applied on ad-valorem basis. Which means a fix percentage will be multiplied by the value of supply to arrive at the total amount of tax to be paid. While the tax rates are fixed at 0%, 5%, 12%, 18% and 28%, how will we value the supplies? Let’s find out

The rules in this behalf are seemingly easy to understand. They say, the value for the purpose of levy of GST shall be the price paid, or payable for the said supply of goods or services or both when the receiver and supplier are not related parties and price is the only consideration.

In simple words, the value which will be multiplied with the rate of tax shall be the amount which receiver is bound to pay to the supplier when money is the only consideration and both parties are unrelated.

However, there are various inclusions and exclusions that we have to keep in mind to correctly estimate the transaction value.

INCLUSIONS – The items that will be included in the price paid/payable to make it a transaction value are –

Any taxes, duties, cess, fees and charges levied under any act, except GST. GST Compensation Cess will be excluded if charged separately by the supplier
Any amount that the supplier is liable to pay which has been incurred by the recipient and is not included in the price
The value will include all incidental expenses in relation to sale such as packing, commission etc
Subsidies linked to supply, except Government subsidies will be included
Interest/late fee/penalty for delayed payment of consideration will be included

EXCLUSIONS – Discounts will be deducted to arrive at the transaction value. However, certain conditions are to be met in this regard.

a. Before or at the time of the supply - Conditions to be satisfied for exclusion

1. discount recorded in the invoice issued in respect of such supply

b. After the supply has been effected - Conditions to be satisfied for exclusion

1. discount is established in terms of an agreement entered into at or before the time of such supply

2. specifically linked to relevant invoices

3. input tax credit as is attributable to the discount on the basis of document issued by the supplier has been reversed by the recipient of the supply

These are the provisions regarding valuation of supplies under GST. I hope this article helps you in understanding GST better.

Keep looking at this space for regular updates on GST.

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The rules in this behalf are seemingly easy to understand. They say, the value for the purpose of levy of GST shall be the price paid, or payable for the said supply of goods or services or both when the receiver and supplier are not related parties and price is the only consideration.In simple words, the value which will be multiplied with the rate of tax shall be the amount which receiver is bound to pay to the supplier when money is the only consideration and both parties are unrelated. However, there are various inclusions and exclusions that we have to keep in mind to correctly estimate the transaction value.INCLUSIONS – The items that will be included in the price paid/payable to make it a transaction value are – <ul><li>Any taxes, duties, cess, fees and charges levied under any act, except GST. GST Compensation Cess will be excluded if charged separately by the supplier</li><li>Any amount that the supplier is liable to pay which has been incurred by the recipient and is not included in the price</li><li>The value will include all&nbsp;incidental expenses&nbsp;in relation to sale such as packing, commission etc</li><li>Subsidies linked to supply, except Government subsidies will be included</li><li>Interest/late fee/penalty&nbsp;for delayed payment of consideration will be included</li></ul> EXCLUSIONS – Discounts will be deducted to arrive at the transaction value. However, certain conditions are to be met in this regard. a.&nbsp;&nbsp;&nbsp;&nbsp;Before or at the time of the supply - Conditions to be satisfied for exclusion 1.&nbsp;&nbsp;&nbsp;&nbsp;discount&nbsp;recorded in the invoice issued in respect of such supply b.&nbsp;&nbsp;&nbsp;&nbsp;After the supply has been effected - Conditions to be satisfied for exclusion1.&nbsp;&nbsp;&nbsp;&nbsp;discount is established in terms of an agreement entered into at or before the time of such supply2.&nbsp;&nbsp;&nbsp;&nbsp;specifically linked to relevant invoices3.&nbsp;&nbsp;&nbsp;&nbsp;input tax credit as is attributable to the discount on the basis of document issued by the supplier has been reversed by the recipient of the supply These are the provisions regarding valuation of supplies under GST. I hope this article helps you in understanding GST better. Keep looking at this space for regular updates on GST. &nbsp;

The rules in this behalf are seemingly easy to understand. They say, the value for the purpose of levy of GST shall be the price paid, or payable for the said supply of goods or services or both when the receiver and supplier are not related parties and price is the only consideration.In simple words, the value which will be multiplied with the rate of tax shall be the amount which receiver is bound to pay to the supplier when money is the only consideration and both parties are unrelated. However, there are various inclusions and exclusions that we have to keep in mind to correctly estimate the transaction value.INCLUSIONS – The items that will be included in the price paid/payable to make it a transaction value are – <ul><li>Any taxes, duties, cess, fees and charges levied under any act, except GST. GST Compensation Cess will be excluded if charged separately by the supplier</li><li>Any amount that the supplier is liable to pay which has been incurred by the recipient and is not included in the price</li><li>The value will include all incidental expenses in relation to sale such as packing, commission etc</li><li>Subsidies linked to supply, except Government subsidies will be included</li><li>Interest/late fee/penalty for delayed payment of consideration will be included</li></ul> EXCLUSIONS – Discounts will be deducted to arrive at the transaction value. However, certain conditions are to be met in this regard. a.    Before or at the time of the supply - Conditions to be satisfied for exclusion 1.    discount recorded in the invoice issued in respect of such supply b.    After the supply has been effected - Conditions to be satisfied for exclusion1.    discount is established in terms of an agreement entered into at or before the time of such supply2.    specifically linked to relevant invoices3.    input tax credit as is attributable to the discount on the basis of document issued by the supplier has been reversed by the recipient of the supply These are the provisions regarding valuation of supplies under GST. I hope this article helps you in understanding GST better. Keep looking at this space for regular updates on GST.

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Valuation of Supply under GST