07 December, 2015

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Value of Taxable Supply under Model GST Act, 2016

Value of Taxable Supply under Model GST Act, 2016

CA Ankit Gulgulia (Jain) | ankitgulgulia@gmail.com
17. Value of taxable supply


(1) 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  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 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 supplyof 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 valuedthat the recipient ofsupply must pay, either directly or indirectly, as a condition of thesaid supply, to the extent that such royalties and fees are not included in the price actually paid or payable;

(d) any taxes, duties, feesand charges levied under any Statute other than the SGST Act or the CGST Act or the IGST Act;

(e) incidental expenses such as commission, 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 servicesat the time of, or before delivery of the goods or, as the case may be, provision of the services;

(f) subsidies provided in any form or manner, linked to the supply; (g) any discount or incentive that may be allowed after the supply has been effected.

(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) (ii) (iii) the consideration, whether paid or payable, is not money, wholly or partly; the supplier and the recipient of the supply are related; there is reason to doubt the truth or accuracy of the transaction value declared by the supplier;

(iv)   business transactions in the nature of 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.

(5) Notwithstanding anything to the contrary contained in the Act or in any contract, the value of a supply of goods made by a taxable person to any person other than a taxable person shall be deemed to be the retail sale price less the tax leviable under this Act on such goods, in a case where such price is required to be declared on the package thereof under the provisions of the Legal Metrology Act, 2009 (1 of 2010) or the rules made thereunder orunder any other law for the time being in force.

Explanation 1 — For the purposes of this sub-section, “retail sale price” means the maximum price at which the goods in packaged form  may be sold to the ultimate consumer  and  includes  all  taxes,  local  or  otherwise,  freight,  transport  charges, commission  payable  to  dealers,  and  all  charges  towards  advertisement,  delivery, packing, forwarding and the like and the price is the sole consideration for such sale:

Explanation 2 — For the purposes of this sub-section,

(a) where on the package of any goodsmore than one retail sale price is declared, the highest of such retail sale prices shall be deemed to be the retail sale price; (b) where the retail sale price, declared on the package of any goods at the time of its supply, is altered to increase the retail sale price, such altered retail sale price shall be deemed to be the retail sale price;

(c) where different retail sale prices are declared on different packages for the sale of any goods in packaged form in different areas, each such retail sale price shall be the retail sale price for the purposes of valuation of the goods intended to be sold in the area to which the retail sale price relates. 

source:- sub-committe II report on Model GST Act, 2016

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