Valuation of GST Taxable supply

Posted on 25 April 2023 Category : GST Law

Valuation of supply of goods and services under GST Act

How does valuation of supply of services do under GST Act? What is transaction value under GST Law? How does Royalty and Licence fee accounted under GST Law? Is it necessary to include commission while calculating GST? How to include packing charges in valuation of GST? How to account discount amount in GST tax calculation? Is Subsidy to be shown when showing GST tax value? How to show reimbursement costs in GST tax calculation?

The extract of valuation of supply of service for GST Tax calculation is quoted below:

Value of taxable supply

The value of a supply of goods and/or services shall be the transaction value, that is the price actually paid or payable for the said supply of goods and/or services where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply. (2) 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. (3) 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. (4) The value of the supply of goods and/or services in the following situations which cannot be valued under sub-section (1), shall be determined in such manner as may be prescribed in the rules. (i) the consideration, whether paid or payable, is not money, wholly or partly; (ii) the supplier and the recipient of the supply are related; (iii) there is reason to doubt the truth or accuracy of the transaction value declared by the supplier; (iv) business transactions undertaken by a pure agent, money changer, insurer, air travel agent and distributor or selling agent of lottery; (v) such other supplies as may be notified by the Central or a State Government in this behalf on the recommendation of the Council.

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