Transaction value for GST calculation in India

Posted on 25 April 2023 Category : GST

GST computation on the basis of Transaction value

What is transaction value under GST tax system in India? How does transaction value work in India under GST regime? What are the elements covered under transaction value for computation of GST in India?

How is Royalties and License Fees accounted in Transaction value for computation of GST? Are commission and packing expenses taken for calculation of transaction value under GST in India? How does subsidy treated in finding Transaction Value of GST? How to account discount and incentives after supply of services under calculation of transaction value?

According to GST Law, the transaction value under sub-section (1) shall include:

(a) 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;

(b) the value, apportioned as appropriate, of such goods and/or services as are supplied directly or indirectly by the recipient of the supply free of charge or at reduced cost for use in connection with the supply of goods and/or services being valued, to the extent that such value has not been included in the price actually paid or payable;

(c) royalties and licence fees related to the supply of goods and/or services being valued that the recipient of supply must pay, either directly or indirectly, as a condition of the said supply, to the extent that such royalties and fees are not included in the price actually paid or payable;

(d) any taxes, duties, fees and charges levied under any statute other than the SGST Act or the CGST Act or the IGST Act;

(e) 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;

(f) subsidies provided in any form or manner, linked to the supply;

(g) any reimbursable expenditure or cost incurred by or on behalf of the supplier and charged in relation to the supply of goods and/or services;

(h) any discount or incentive that may be allowed after the supply has been effected:

Provided that such post-supply discount which is established as per the agreement and is known at or before the time of supply and specifically linked to relevant invoices shall not be included in the transaction value.

The transaction value under sub-section (1) shall not include any discount allowed before or at the time of supply provided such discount is allowed in the course of normal trade practice and has been duly recorded in the invoice issued in respect of the supply.

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