Category: Value of Supply

Yes. Section 15 of the CGST Act, 2017 provides for inclusions to the transaction value (on which GST will be payable). The below are broadly, the inclusions prescribed:
(a) any taxes, duties, cess, fees and charges levied under any law for the time being in force other than the CGST Act, 2017, the SGST Act, 2017, UTGST Act, 2017 and the Goods and Services Tax (Compensation to States) Act, 2017, if charged separately by the supplier;
(b) any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient, but not included in the price;
(c) incidental expenses, including commission and packing, charged by the supplier to the recipient, and any amount charged for anything done by the supplier in respect of the supply until delivery of goods or supply of services;
(d) interest or late fee or penalty for delayed payment of any consideration for any supply; and
(e) subsidies directly linked to the price excluding subsidies provided by the Government.

(ICAI FAQ PUBLICATION 06-09-2017 VALUE OF TAXABLE SUPPLY : FAQ NO.50)

Under the GST law, consideration can be in “money or otherwise”, and also includes the monetary value of an act or forbearance, in relation to a supply. Consideration may also flow from any person other than the recipient. In cases, where the money received in respect of the supply is not the sole consideration, the “price is not the sole consideration”. E.g. Buyer of capital goods discharges the loan of seller, goods purchased on exchange offer, etc.

(ICAI FAQ PUBLICATION 06-09-2017 VALUE OF TAXABLE SUPPLY : FAQ NO. 49)

The law mandates a reference to the CGST Rules where the supply is between related persons. However, since the supply is at “arm’s length price”, the fact that the price assigned to the transaction is an ‘open market value’ should be established.

(ICAI FAQ PUBLICATION 06-09-2017 : Time and Value of Supply -FAQ NO. 48)

The relationship will be examined based on the explanation appended to Section 15 of the CGST Act, 2017 which defines the term “related persons”. Accordingly, the following persons shall be deemed to “related persons” for the purpose of GST, if:
 such persons are officers or directors of one another’s businesses;
 such persons are legally recognized partners in business;
 such persons are employer and employee;
 any person directly or indirectly owns, controls or holds twenty-five per cent or more of the outstanding voting stock or shares of both of them;
 one of them directly or indirectly controls the other;
 both of them are directly or indirectly controlled by a third person;
 together they directly or indirectly control a third person; or
 they are members of the same family;
Further, persons who are associated in the business of one another where one is the sole agent/ sole distributor/ sole concessionaire of the other, shall be deemed to be related.

(ICAI FAQ PUBLICATION 06-09-2017 : Time and Value of Supply -FAQ NO. 47)

Where transaction value is partly, or not wholly in money, the same cannot be
accepted. The value of supply should be determined under the CGST Rules, 2017.

(ICAI FAQ PUBLICATION 06-09-2017 : Time and Value of Supply -FAQ NO. 45)

No. Reference to the CGST Rules, 2017 is required only when the supply is between related persons (including different registrations of the same PAN and principal-agent supplies), or where the consideration payable is not wholly in money. However, in specific cases where the categories of goods and services are notified in this regard (such as money-changing), the CGST Rules,2017 must be referred to, irrespective of the fact that the supplier and recipient are unrelated and price is the sole consideration.

(ICAI FAQ PUBLICATION 06-09-2017 : Time and Value of Supply -FAQ NO. 44)

Contract price is more specifically referred to as ‘transaction value’ and that is the basis for computing tax. However, the transaction will not be accepted as the value of supply where the supply is between related persons (including different registrations of the same PAN and principal-agent supplies), or where the consideration payable is not wholly in money.

(ICAI FAQ PUBLICATION 06-09-2017 : Time and Value of Supply -FAQ NO. 43)

No, section 15 and the rules prescribed under this Section are common for supply of goods and supply of services. The provisions of valuation and the rules would apply to composite supplies and mixed supplies equally.

(ICAI FAQ PUBLICATION 06-09-2017 : Time and Value of Supply -FAQ NO. 39)