Method of valuation of goods under GST

Posted on 10 June 2022 Category : GST terms

What is valuation of goods under GST

The details about valuation of goods under GST are explained here.

Valuation in GST

Valuation of the supply of goods:

At present, excise duty is paid on the event of manufacture of excisable goods and VAT on the sale of goods. VAT/CST is computed on sale price+ excise duty paid. With the shift of taxable event from manufacture to supply of goods, the valuation of goods could be simplified. Under GST, actual value received as a consideration for the supply of goods would be subject to GST with some exceptions.

GST would normally be payable on the ‘transaction value’. Transaction value is the price actually paid or payable for the said supply of goods and/or services between un-related parties and price is the sole consideration. The transaction value is also said to include:

Taxes other than GST
Expenses incurred by recipient in relation to supply
Incidental expenses charged at the time or before the supply
Interest etc. for late payment
Subsides directly linked to the price excluding subsidies provided by the Central and Governments
As regards discounts/ incentives, it will form part of ‘transaction value’, if it is allowed after the supply is affected. However, discounts/ incentives given before or at the time of supply would be permissible as deduction from the transaction value. This would be indicated in the invoice itself.

Volume / quantity discounts would be passed on by way of credit notes.

Method of Valuation in case supply of goods or services is for a consideration not wholly in money:

Valuation Rules provides that, where the supply of goods or services is for a consideration not wholly in money, the value of supply shall be:

open market value
if (a) is not, then sum total of consideration in money and equivalent thereof
value of like kind and quantity
cost+10%
by reasonable means.

However, where there is no consideration and the receiver is eligible for credit then the value declared would be accepted as the proper value. Though not specified, it may be ideal to ensure that reasonable value is ascribed to such transaction to avoid any questions at the time of audit or otherwise.

The valuation provisions envisaged may result in disputes is the understanding as on date. The settled case laws in Customs for market value and in Central Excise for other than sole consideration may assist in guidance in case of tainted transactions.

The information on valuation of goods under GST is detailed above. Comment below your thoughts on valuation of goods under GST

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