WHAT IS VALUE OF SUPPLY?
Value of supply is an important concept under GST as it determines
the GST payable In a transaction.
According to Sec. 15(1)- The value of a supply of goods or services or both shall be the transaction value, which
is the price actually paid or payable for the said supply of goods or services or both where the supplier and the
recipient of the supply are not related and the price is the sole consideration for the supply.
It is the price or consideration paid by the customer
Example Mr. X is selling a product for Rs. 1,000 to Mr. B. In this example value of supply will be consideration
charged i.e. Rs. 1,000
WHAT IS TRANSACTIONAL VALUE?
Where the parties are related and a reasonable value may not be charged, or transaction may take place as barter
or exchange, the the GST is charged on the transaction value.
The value at which unrelated parties would transact in the normal course of business.
Eg: X sells a product to Y (related party) for Rs.5000 , the actual value of which is known to be Rs.8000. Then GST
will be charged on Rs.8000
WHAT ARE INCLUDED IN VALUE OF SUPPLY?
(a) any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than GST law if
charged separately by the supplier;
(b) any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the
recipient and not included in the price.
(c) incidental expenses, including commission and packing, charged by the supplier.
(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 Govt subsidies.
DETERMINATION OF VALUE OF SUPPLY
1) Value of supply of goods or services where the consideration is not wholly in money Then value of supply shall
be
i. Open Market Value-
ii. if the open market value is not available under clause
(a), be the sum total of consideration in money and any such further amount in money as is equivalent to the
consideration not in money, if such amount is known at the time of supply;
iii. if the value of supply is not determinable under clause (a) or clause (b), be the value of supply of goods or services
or both of like kind and quality.
[Link] is not determinable under any of clause above, be the sum total of consideration in money and such further
amount in money that is equivalent to consideration not in money as determined by the application of rule 4 or rule
5 in that order
EXAMPLE
1. Mr. A sold a bike for Rs. 34,000 with exchange of old bike. Open Market price of the new bike is Rs. 52,000. Old Bike
can be sold in the market for Rs. 20,000. Determine the value of supply for the purpose of levy of GST.
Ans: In this case Open Market Value is available. Hence, Value of Supply will be Rs. 52,000.
2. Mr. A sold a bike for Rs. 34,000 with exchange of old bike. Open Market price of the new bike is not available. Old Bike
can be sold in the market for Rs. 20,000. Determine the value of supply for the purpose of levy of GST.
Ans: In this case Open Market Value of new bike is not available. Hence,Value of Supply will be: Consideration in money
i.e. Rs. 34,000 + Amount in money as is equivalent to the consideration not in money i.e. Rs. 20,000 = Rs. 54,000
3. Mr. A sold a bike for Rs. 34,000 with exchange of old bike. Open Market price of the new bike as well as old bike is not
available. A bike with the same features of other company is selling in the market for Rs. 51,000. Determine the value of
supply for the purpose of levy of GST.
Answer: In this case Open Market Value of new bike as well as old bike is not [Link] of like kind bike of another
company i.e. Rs. 51,000 will be considered as value of supply.
[Link] of supply of goods or services or both between distinct or related persons other than through an agent
If a person is obtained more than one registration whether in one state or more than one state shall, in
respect of each such registration, be treated as distinct person.
The value of the supply will be;
(a) the open market value of such supply;
(b) if the open market value is not available, be the value of supply of goods or services of like kind and quality;
(c) if the value is not determinable under clause (a) or (b), be the value as determined by the application of rule 4 or
rule 5, in that order.
If the goods are intended for further supply as such by the recipient than the value shall, at the option of the supplier,
90% of the amount charged from the customer (unrelated party) by the recipient
EXAMPLE
1. Mr. A sold a bike without consideration to Mr. B. Open Market price of the bike is Rs. 52,000. Mr. B is family
member of Mr. A . Determine the value of supply for the purpose of levy of GST.
Answer: In this case Mr. A & Mr. B is related party. Hence,Value of Supply will be open market value i.e. Rs. 52,000.
2. X Enterprises sold a bike for Rs. 30,000 to Y Enterprises. Open Market price of the bike is Rs. 52,000. Both firms
are registered under the same PAN. Determine the value of supply for the purpose of levy of GST.
Answer: In this case X Enterprises & Y Enterprises is distinct person. Hence,Value of Supply will be open market
value i.e. Rs. 52,000
[Link] of supply of goods made or received through an agent-
The value of supply of goods between the principal and his agent shall:
(a) be the open market value of the goods being supplied,
(b) At the option of the supplier, 90% of the amount charged from the customer (unrelated party) by the recipient,
(c) where the value of a supply is not determinable under clause (a), the same shall be determined by the application
of rule 4 or rule 5 in that order
EXAMPLE
1. 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 the supply. Another independent supplier is
supplying groundnuts of like kind and quality to the said agent at the price of Rs. 4550 per quintal.
Ans: 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 Rs.5000 i.e., Rs.4500 per quintal.
[Link] of supply of goods or services or both based on cost
Where the value of a supply of goods or services or both is not determinable by any of the preceding rules of
this Chapter, the value shall be one hundred and ten percent of the cost of production or manufacture or the cost of
acquisition of such goods or the cost of provision of such services
5. Residual method for determination of value of supply of goods or services or both
Where the value of supply of goods or services or both cannot be determined under rules 27 to 30, the same shall
be determined using reasonable means consistent with the principles and the general provisions of section 15 and
the provisions of this Chapter
[Link] of supply for imported goods and services under GST
➔ For goods, the value is calculated- based on the rules in Customs Act (Custom value+import duty = Value of
supply)
➔ For services,Value of taxable supply= Total consideration x taxable
SITUATIONS 1. INTRASTATE SUPPLY
2. INTER-STATE SUPPLY
3. INPUT TAX CREDIT
4. IGST