Value of Supply determines the taxable base on which GST is computed. Section 15 of CGST Act defines what is included and excluded, while Rules 27–35 handle special cases like related parties, agents, forex, insurance, and pure agents. Incorrect valuation = incorrect GST = audit risk.
Price actually paid or payable for the supply, where supplier and recipient are not related and price is the sole consideration
Any amount of duty, fee, cess charged under any law other than GST — e.g., Excise (on tobacco), Municipal tax
Any expense incurred by recipient but payable by supplier — e.g., commission, packing, transport arranged by recipient but charged to supplier
Commission, packing, loading/unloading, insurance, and similar charges charged by the supplier to the recipient
Interest or late fee or penalty for delayed payment of consideration for the supply
Subsidies directly linked to the price — e.g., government subsidy to reduce selling price of fertiliser. Exception: subsidies from government NOT linked to price are excluded
Discounts given before or at the time of supply and recorded in the invoice are deductible from the value
Post-supply discounts allowed ONLY if: (a) established by agreement at or before time of supply, (b) linked to specific invoices, and (c) recipient has reversed proportionate ITC
Refundable deposits are NOT included in value. However, if deposit is applied toward consideration, it becomes taxable at that point
CGST, SGST, IGST, and Compensation Cess amounts are NOT included in the value of supply (tax is calculated on the value, not on itself)
Open market value; or value of like kind/quality supply; or 110% of cost of production/provision; or value determined by residual method
Open market value; or 90% of price charged by agent to the customer
Open market value or 110% of manufacturing cost
Open market value of like goods; failing which, 90% of the final selling price to unrelated buyer
When value cannot be determined by Rules 27-30: use reasonable means consistent with GST Act principles. Cost + 10% markup as a fallback
Special computation methods prescribed for each scenario — e.g., forex: lesser of 1% of gross amount or ₹250 for amounts up to ₹1 lakh
Expenditure incurred by supplier as pure agent is excluded from value, provided: written authority exists, supplier acts as pure agent, and the amount is separately indicated in invoice
Value of supply determined by the government through notification for specific goods/services — e.g., lottery, betting, gambling
Transaction value is the price actually paid or payable for supply of goods/services, where the supplier and recipient are NOT related and price is the SOLE consideration. It includes all amounts charged — e.g., packing, transport, insurance. If conditions are not met (related parties, non-monetary consideration), valuation rules under Chapter IV of CGST Rules apply.
Yes, but with conditions. Pre-supply discounts (recorded on invoice at time of supply) are fully deductible — just reduce the invoice value. Post-supply discounts (volume discounts, year-end rebates) are deductible ONLY if: (1) the discount was known/agreed before or at time of supply, (2) it can be linked to specific invoices, and (3) the recipient reverses proportionate ITC. If any condition fails, the discount cannot reduce GST value.
Under Rule 27, for supply between related persons (or distinct persons like branches): (1) Use open market value; if not available, (2) Use value of supply of like kind and quality; if not available, (3) Use 110% of cost of production/provision (for goods) or cost of provision (for services); if none work, (4) Use residual method under Rule 31. For supply of goods through agent, Rule 28 applies (90% of agent's selling price or open market value).
If the supplier charges freight/transport to the buyer as part of the supply contract (e.g., CIF delivery), it is included in the value of supply and taxed at the same GST rate as the goods. However, if transport is arranged separately by the buyer (FOB/ex-works), it is NOT part of the goods' value — the transport service is separately taxed at the applicable rate for GTA (Goods Transport Agency) services.
Under Rule 33, a pure agent incurs expenditure on behalf of the recipient (not the supplier). If the supplier acts as a 'pure agent' for certain expenses — e.g., a customs broker paying customs duty on behalf of the importer — those amounts are excluded from the supply value, provided: (a) written authority from recipient, (b) supplier doesn't hold any title/interest, (c) amount shown separately on invoice. This legitimately reduces the GST base.
Discounts, freight, pure agent deductions — Laabam.One handles all Section 15 inclusions/exclusions automatically in your invoices.
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