VALUE OF SUPPLY
VALUE OF SUPPLY
[SEC. 15]
|
Transaction value [Sec. 15(1)] |
♦ The value of a supply of goods or services or both ♦ shall be the transaction
value, ♦ which is the price
actually paid or payable for the said supply of goods or services or both
♦ where the supplier and the recipient of the supply are not related and ♦ the price is the sole
consideration for the supply |
|
Items includes in value [Sec. 15(2)] |
The value of supply shall include— (a) any taxes, duties,
cesses, fees and charges levied under any law for the time being in force other than this Act, the State Goods
and Services Tax Act, the Union Territory Goods and Services Tax Act and the
Goods and Services Tax (Compensation to States) Act, if charged separately by the supplier; Example:- If Taxi owner charge Toll Tax in bill, GST will be
charge on the value including Toll Tax. (b) 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 or services or both; (c) incidental expenses,
including commission and packing, charged by the supplier to
the recipient of a supply and any amount charged for anything done by the
supplier in respect of the supply of goods or services or both at the time of, or before 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.g.
suppose Bharti airtel charge Rs. 100 as late payment fees, now GST will
charge on such fees, (e) subsidies directly
linked to the price excluding
subsidies provided by the Central Government and State Governments. Explanation.—For the purposes of this sub-section, the amount of
subsidy shall be included in the value of supply of the supplier who receives
the subsidy |
|
Discount before or at or after the time of supply [Sec. 15(3)] |
The value of the supply shall not include any discount which is
given- (a) before or at the
time of the supply if such discount has been duly recorded in the invoice
issued in respect of such supply; and (b) after the supply
has been effected, if— (i) such discount is established in terms of an agreement entered into at or before the time of such
supply and specifically linked to
relevant invoices; and (ii) input tax credit
as is attributable to the discount on the basis of document issued by the
supplier has been reversed by the
recipient of the supply. Note; Trade discount, cash discount, quantity discount, discount
on meeting target if enter into the term of agreement then it shall be
deducted from value. Example: Cash back by PAYTM, shall not be reduced from value
because it is pass to buyer by third party. Example: Free service of car under warranty by dealer, billed to
car manufacturer shall "amount to supply" to manufacturer. |
|
Residual [Sec. 15(4)] |
Where the value of the supply of goods or services or both cannot
be determined under sub-section (1), the same shall be determined in such
manner as may be prescribed. |
|
Value of supply notified by Govt. [Sec. 15(5)] |
Notwithstanding anything contained in sub-section (1) or
sub-section (4), the value of such supplies as may be notified by the
Government on the recommendations of the Council shall be determined in such
manner as may be prescribed. |
Illustration 1
Mr. Kohli
residing in Noida, purchase 20,000 Markers @ Rs. 20 each from Ankita&
Stationary, wholesalers at Delhi. Mr. Kohli's sister working as Manager in
Ankita& Stationary. Open Market Value of Marker is Rs. 23. Ankita&
Stationary additionally charges Rs. 10,000 for supplying markers to Kohli’s
business place.
Ans: Based on the information provided, Mr. Kohli, who resides in Noida, purchased 20,000 markers from Ankita& Stationary, a wholesaler in Delhi. The cost of each marker was Rs. 20. It is worth mentioning that Mr. Kohli's sister works as a manager at Ankita& Stationary.
In addition to the cost of the markers, Ankita& Stationary charged an additional Rs. 10,000 for supplying the markers to Mr. Kohli's business place.
The open market value of each marker is given as Rs. 23, which means that if Mr. Kohli were to purchase the markers directly from the open market without involving Ankita& Stationary, he would pay Rs. 23 per marker.
Illustration 2
- Mr. Ramesh a
manufacture furnish the following particular
|
Particulars |
Amount |
|
Price of the
machine |
1,00,000 |
|
Packing charges |
10,000 |
|
Designing
charges |
20,000 |
|
Transit
insurance |
1,000 |
|
Freight outward |
8,000 |
|
Cash discount
to customer |
2% |
Compute the value
of machine when Ramesh has to deliver machine to factory of recipient.
Ans: To compute the value of the machine when Mr. Ramesh has to deliver it to the recipient's factory, we need to add up all the relevant costs and subtract any applicable cash discounts.
The given particulars and their respective amounts are as follows:
Price of the machine: ₹1,00,000
Packing charges: ₹10,000
Designing charges: ₹20,000
Transit insurance: ₹1,000
Freight outward: ₹8,000
Cash discount to customer: 2% of the machine's price
Let's calculate the total value of the machine after considering these costs:
Total cost of the machine = Price of the machine + Packing charges + Designing charges + Transit insurance + Freight outward
Total cost of the machine = ₹1,00,000 + ₹10,000 + ₹20,000 + ₹1,000 + ₹8,000
Total cost of the machine = ₹1,39,000
Now, let's calculate the cash discount:
Cash discount = 2% of the machine's price
Cash discount = 2/100 * ₹1,00,000
Cash discount = ₹2,000
Finally, we can compute the value of the machine when Mr. Ramesh has to deliver it to the recipient's factory:
Value of the machine = Total cost of the machine - Cash discount
Value of the machine = ₹1,39,000 - ₹2,000
Value of the machine = ₹1,37,000
Therefore, the value of the machine when Mr. Ramesh has to deliver it to the recipient's factory is ₹1,37,000.
Illustration 3
Computation of
value of taxable supply : From the following information determine the value of
taxable supply as per provisions of Section 15 of the CGST Act, 2017?
|
Particulars |
Amount |
|
Contracted
value of supply of goods (including GST @ 18%) |
11,00,000 |
|
The contracted
value of supply includes the following : |
|
|
(1) Cost of
primary packing |
25,000 |
|
(2) Cost of
protective packing at recipient's request for safe transportation |
15,000 |
|
(3) Design and
engineering charges |
85,000 |
|
Other
information: |
|
|
(i) Commission
paid to agent by recipient on instruction of supplier |
5,000 |
|
(ii) Freight
and insurance charges paid by recipient on behalf of supplier |
75,000 |
Ans: To determine the value of taxable supply as per the provisions of Section 15 of the CGST Act, 2017, we need to consider the contracted value of supply of goods and certain additional costs. Let's calculate the value of taxable supply based on the given information:
Contracted value of supply of goods (including GST @ 18%): ₹11,00,000
Additional costs included in the contracted value of supply:
(1) Cost of primary packing: ₹25,000
(2) Cost of protective packing at recipient's request for safe transportation: ₹15,000
(3) Design and engineering charges: ₹85,000
Other information:
(i) Commission paid to agent by recipient on instruction of the supplier: ₹5,000
(ii) Freight and insurance charges paid by recipient on behalf of the supplier: ₹75,000
Now, let's compute the value of taxable supply by subtracting the additional costs and other information from the contracted value of supply of goods:
Value of taxable supply = Contracted value of supply of goods - (Cost of primary packing + Cost of protective packing + Design and engineering charges + Commission paid to agent + Freight and insurance charges)
Value of taxable supply = ₹11,00,000 - (₹25,000 + ₹15,000 + ₹85,000 + ₹5,000 + ₹75,000)
Value of taxable supply = ₹11,00,000 - ₹2,05,000
Value of taxable supply = ₹8,95,000
Therefore, the value of taxable supply as per the provisions of Section 15 of the CGST Act, 2017, is ₹8,95,000.
Illustration 4
Computation of
value of taxable supply : From the following information determine the value of
taxable supply as per provisions of section 15 of the CGST Act, 2017?
|
Particulars |
Amount |
|
Value of
machine (including GST @ 12%) |
15,00,000 |
|
The invoice
value includes the following |
|
|
(1) Taxes
(other than CGST /SGST /IGST) charged separately by the supplier |
15,000 |
|
(2) Weighment
and loading charges |
25,000 |
|
(3) Consultancy
Charges in relation to pre-installation planning |
10,000 |
|
(4) Testing
Charges |
2,000 |
|
(5) Inspection
Charges |
4,500 |
|
Other
information: |
|
|
(i) Subsidy received
from Central government for setting up factory in backward region |
51,000 |
|
(ii) Subsidy
received from third party for timely supply of machine to recipient |
50,000 |
|
(iii) Trade
discount actually allowed shown separately in invoice |
24,000 |
Give reasons with
suitable assumptions where necessary. Solution: Computation of Value of taxable
supply of Goods.
Ans: To compute the value of taxable supply as per the provisions of Section 15 of the CGST Act, 2017, we need to consider the value of the machine and certain other factors. Let's calculate the value of taxable supply based on the given information:
Value of machine (including GST @ 12%): ₹15,00,000
The invoice value includes the following:
(1) Taxes (other than CGST/SGST/IGST) charged separately by the supplier: ₹15,000
(2) Weighment and loading charges: ₹25,000
(3) Consultancy Charges in relation to pre-installation planning: ₹10,000
(4) Testing Charges: ₹2,000
(5) Inspection Charges: ₹4,500
Other information:
(i) Subsidy received from the Central government for setting up a factory in a backward region: ₹51,000
(ii) Subsidy received from a third party for timely supply of the machine to the recipient: ₹50,000
(iii) Trade discount actually allowed shown separately in the invoice: ₹24,000
Now, let's compute the value of taxable supply by adjusting for the given factors:
Value of taxable supply = Value of machine - (Taxes + Weighment and loading charges + Consultancy Charges + Testing Charges + Inspection Charges - Subsidy from the Central government - Subsidy from third party - Trade discount)
Value of taxable supply = ₹15,00,000 - (₹15,000 + ₹25,000 + ₹10,000 + ₹2,000 + ₹4,500 - ₹51,000 - ₹50,000 - ₹24,000)
Value of taxable supply = ₹15,00,000 - ₹1,31,500
Value of taxable supply = ₹13,68,500
Therefore, the value of taxable supply as per the provisions of Section 15 of the CGST Act, 2017, is ₹13,68,500.
Illustration 5
Value of taxable
supply - Section 15: Comfort footwear, a registered supplier of Agra, has a
non-moving stock worth Rs. 8,00,000 of a particular variety of shoes that are
out of fashion. It has not been able to find market inspite of huge discounts
offered. Subsequently, it was able to sell this stock at a very low price of
Rs. 5,00,000 to a retailer in Madhya Pradesh with a condition that the retailer
would display hoardings of Comfort Footwear in all their retail outlets in the
State. Determine the value of supply.
In this case, Comfort Footwear, a registered supplier in Agra, sold a non-moving stock of shoes worth Rs. 8,00,000 at a discounted price of Rs. 5,00,000 to a retailer in Madhya Pradesh. However, the condition for the sale was that the retailer would display hoardings of Comfort Footwear in all their retail outlets in the state.
The value of supply in this case would be the actual transaction value, which is the discounted price of Rs. 5,00,000. The non-moving stock's original value of Rs. 8,00,000 and the condition of hoarding display do not directly affect the value of taxable supply. The discounted price at which the stock was sold is the consideration received by the supplier for the supply.
Therefore, the value of taxable supply in this scenario is Rs. 5,00,000.
Illustration 6
Computation of
value of taxable supply and tax payable : Determine the value of taxable supply
as per Section 15 of the CGST Act, 2017 and the Rules thereof:
|
Particulars |
Amount |
|
Contracted sale
price of goods (including CGST and SGST @5%) |
10,56,000 |
|
The contracted
sale price includes the following elements of cost: |
|
|
(i) Cost of
drawings and design |
5,000 |
|
(ii) Cost of
primary packing |
2,000 |
|
(iii) Cost of
packing at buyer's request |
4,000 |
|
(iv) Fright and
insurance from 'place of removal' to buyer's premises |
43,000 |
A discount of Rs.
6,000 was given by the supplier at the time of supply of goods. CGST and SGST
is levied @5%.
Let's calculate the value of taxable supply based on the given information:
Contracted sale price of goods (including CGST and SGST @ 5%): Rs. 10,56,000
Elements of cost included in the contracted sale price:
(i) Cost of drawings and design: Rs. 5,000
(ii) Cost of primary packing: Rs. 2,000
(iii) Cost of packing at buyer's request: Rs. 4,000
(iv) Freight and insurance from 'place of removal' to buyer's premises: Rs. 43,000
Discount given by the supplier: Rs. 6,000
Now, let's calculate the value of taxable supply by subtracting the discount and the elements of cost from the contracted sale price of goods:
Value of taxable supply = Contracted sale price of goods - (Cost of drawings and design + Cost of primary packing + Cost of packing at buyer's request + Freight and insurance - Discount)
Value of taxable supply = Rs. 10,56,000 - (Rs. 5,000 + Rs. 2,000 + Rs. 4,000 + Rs. 43,000 - Rs. 6,000)
Value of taxable supply = Rs. 10,56,000 - Rs. 54,000
Value of taxable supply = Rs. 10,02,000
Now, let's calculate the tax payable by multiplying the value of taxable supply by the CGST and SGST rates (5%):
Tax payable = Value of taxable supply * (CGST rate + SGST rate)
Tax payable = Rs. 10,02,000 * (5% + 5%)
Tax payable = Rs. 10,02,000 * 10%
Tax payable = Rs. 10,02,000 * 0.10
Tax payable = Rs. 1,00,200
Therefore, the value of taxable supply as per Section 15 of the CGST Act, 2017, is Rs. 10,02,000, and the tax payable (CGST + SGST) is Rs. 1,00,200.
Illustration 7
Explain briefly
the term 'Related Persons' as per CGST Act, 2017.?
Ans: The relevant
provisions are discussed as under—
(1) Related
persons [Explanation to Section 15]: Persons shall be deemed to be
"related persons" if—
(i) such persons
are officers or directors of one another's businesses;
(ii) such persons
are legally recognised partners in business;
(iii) such
persons are employer and employee;
(iv) any person
directly or indirectly owns, controls or holds 25% or more of the outstanding
voting stock or shares of both of them;
(v) one of them
directly or indirectly controls the other;
(vi) both of them
are directly or indirectly controlled by a third person;
(vii) together
they directly or indirectly control a third person; or
(viii) they are
members of the same family.
Illustration 8
Admission to
true theatre is Rs 90 per ticket for a Marathi as well as for a Hindi movie
plus entertainment tax Rs 10% on Marathi Movie and 20% on other languages. In
the month of November true theater sold 2000 tickets of Marathi and 1500
tickets o Hindi movie. Find the value of taxable supply of service . Applicable
rate of GST 18% and 28%. Find the GST liability?
Ans: To calculate the value of taxable supply of service and the GST liability in this scenario, we need to consider the number of tickets sold for Marathi and Hindi movies, the ticket price, the applicable entertainment tax rates, and the GST rates.
Given:
Ticket price for Marathi and Hindi movies: Rs 90 per ticket
Entertainment tax rate for Marathi movie: 10%
Entertainment tax rate for other languages: 20%
Tickets sold for Marathi movie: 2000
Tickets sold for Hindi movie: 1500
Applicable GST rates: 18% and 28%
Let's calculate the value of taxable supply of service for both Marathi and Hindi movies:
Value of taxable supply for Marathi movie = Ticket price per ticket * Number of tickets sold + Entertainment tax on Marathi movie
Value of taxable supply for Marathi movie = Rs 90 * 2000 + (10% of Rs 90 * 2000)
Value of taxable supply for Marathi movie = Rs 1,80,000 + Rs 18,000
Value of taxable supply for Marathi movie = Rs 1,98,000
Value of taxable supply for Hindi movie = Ticket price per ticket * Number of tickets sold + Entertainment tax on other languages
Value of taxable supply for Hindi movie = Rs 90 * 1500 + (20% of Rs 90 * 1500)
Value of taxable supply for Hindi movie = Rs 1,35,000 + Rs 27,000
Value of taxable supply for Hindi movie = Rs 1,62,000
Now, let's calculate the GST liability for both Marathi and Hindi movies:
GST liability for Marathi movie = Value of taxable supply * GST rate
GST liability for Marathi movie = Rs 1,98,000 * 18%
GST liability for Marathi movie = Rs 35,640
GST liability for Hindi movie = Value of taxable supply * GST rate
GST liability for Hindi movie = Rs 1,62,000 * 28%
GST liability for Hindi movie = Rs 45,360
Therefore, the value of taxable supply of service is Rs 1,98,000 for the Marathi movie and Rs 1,62,000 for the Hindi movie. The GST liability is Rs 35,640 for the Marathi movie (18% GST) and Rs 45,360 for the Hindi movie (28% GST).
Illustration 9
M/s Ashok Enterprises
sells mineral water bottles with MRP Rs 20 pr bottles. However customer get
discount of Rs 4 per bottle . In the month of October 2017, M/s Ashok
enterprise sold 2000 bottles. Applicable rate of GST 18% . Find the tax
liability.
Ans: To calculate the tax liability in this scenario, we need to consider the selling price after discount, the number of bottles sold, and the applicable GST rate.
Given:
MRP of mineral water bottle: Rs 20 per bottle
Discount per bottle: Rs 4
Number of bottles sold: 2000
Applicable GST rate: 18%
First, let's calculate the selling price per bottle after the discount:
Selling price per bottle = MRP - Discount
Selling price per bottle = Rs 20 - Rs 4
Selling price per bottle = Rs 16
Now, let's calculate the value of taxable supply:
Value of taxable supply = Selling price per bottle * Number of bottles sold
Value of taxable supply = Rs 16 * 2000
Value of taxable supply = Rs 32,000
Finally, let's calculate the tax liability:
Tax liability = Value of taxable supply * GST rate
Tax liability = Rs 32,000 * 18%
Tax liability = Rs 32,000 * 0.18
Tax liability = Rs 5,760
Therefore, the tax liability for M/s Ashok Enterprises for selling 2000 mineral water bottles with a discount of Rs 4 per bottle and an applicable GST rate of 18% is Rs 5,760.
Illustration 10
Best car ltd
sell a car worth Rs 5,00,000 to Sunder Automobiles . best card ltd incurred
charges of Rs 6000 on the car. Best cars ltd provided a discount of 1% on the
car price as part of Diwali scheme. Best cars ltd agree to provided a future a
further discount of 0.5% if sunder automobiles make payment by 31st
of the month using net banking. Find the NEGST liability in the hands of Best
Cars Ltd Applicable GST is 18%
Ans: To calculate the NEGST (Net Exempted Goods and Services Tax) liability in the hands of Best Cars Ltd, we need to consider the selling price of the car, the incurred charges, and the discounts given.
Given:
Selling price of the car: Rs 5,00,000
Incurred charges: Rs 6,000
Discount 1% (Diwali scheme): Rs 5,000 (1% of Rs 5,00,000)
Additional discount 0.5% (for payment by 31st): Rs 2,500 (0.5% of Rs 5,00,000)
First, let's calculate the total discounts provided by Best Cars Ltd:
Total discount = Discount 1% + Additional discount
Total discount = Rs 5,000 + Rs 2,500
Total discount = Rs 7,500
Now, let's calculate the taxable value of the supply:
Taxable value = Selling price of the car + Incurred charges - Total discount
Taxable value = Rs 5,00,000 + Rs 6,000 - Rs 7,500
Taxable value = Rs 5,06,000
Next, let's calculate the NEGST liability:
NEGST liability = Taxable value * GST rate
NEGST liability = Rs 5,06,000 * 18%
NEGST liability = Rs 5,06,000 * 0.18
NEGST liability = Rs 91,080
Therefore, the NEGST liability in the hands of Best Cars Ltd, considering the selling price of Rs 5,00,000, incurred charges of Rs 6,000, and the discounts provided, with an applicable GST rate of 18%, is Rs 91,080.
Illustration 11
S PVt ltd a
registered supplier furnish the following detail relating to supplies defected
during December 2017:
|
Particulars |
Amount |
|
Sale price
charged to customer within state (excluding GST) Service
charges levied in the invoices Packing and
forwarding expenses incidental to sales Weighment
charges, show separately in invoices Commission
charged to buyers |
10,00,00 11,000 14,200 7,800 15,000 |
Prompt payment
discount, indicated in invoice 1% if payment made within 1 month.
Rate of tax as
CGST 6% SGST 6% IGST 12%
60% of the
customer did not make the payment with one month from the date of supply. Hence
the supplier recovered the prompt payment offered to them.
Ans: Here is the calculation of GST for S Pvt Ltd for December 2017:
- Sale price charged to customer within state (excluding GST): 10,00,000
- Service charges levied in the invoices: 11,000
- Packing and forwarding expenses incidental to sales: 14,200
- Weighment charges, shown separately in invoices: 7,800
- Commission charged to buyers: 15,000
- Prompt payment discount, indicated in invoice: 1% if payment made within 1 month
- Rate of tax: CGST 6%, SGST 6%, IGST 12%
- 60% of the customer did not make the payment within one month from the date of supply. Hence the supplier recovered the prompt payment offered to them.
Calculation of GST
- CGST = 6% of (10,00,000 + 11,000 + 14,200 + 7,800) = 66,000
- SGST = 6% of (10,00,000 + 11,000 + 14,200 + 7,800) = 66,000
- IGST = 12% of (10,00,000 + 11,000 + 14,200 + 7,800) = 1,32,000
- Total GST = CGST + SGST + IGST = 264,000
Calculation of Output GST Liability
- Output GST liability = Total GST – Prompt payment discount
- Output GST liability = 264,000 – 1% of (10,00,000 + 11,000 + 14,200 + 7,800)
- Output GST liability = 264,000 – 1,000
- Output GST liability = 263,000
Payment of GST
- The supplier has to pay GST to the government within 30 days from the end of the month in which the supply was made.
- In this case, the supplier has to pay GST by January 31, 2018.
ITC Eligibility
- The supplier is eligible to claim ITC on the GST paid on the inputs used for making the supplies.
- The supplier can claim ITC by filing GSTR-3B return.
- The supplier has to file GSTR-3B return by January 15, 2018.
Illustration 12
Mrs Jaya
purchase Samsung television set costing Rs 85,000 from Giri, in exchange of her
existing TV sets . After an hour bargaining, the shop manager agrees to accept
Rs 78,000 instead of his quote of Rs 81,000 As he would still be in a
profitable passion (the old TV can be sold for Rs 8000)
Ans: Yes, that's correct. Mrs. Jaya bought a Samsung television set costing Rs. 85,000 from Giri. After an hour of bargaining, the shop manager agreed to accept Rs. 78,000 instead of his initial quote of Rs. 81,000. This is because the shop manager would still be in a profitable position, as he could sell Mrs. Jaya's old TV set for Rs. 8,000.
The total cost of the new TV set for Mrs. Jaya would be Rs. 70,000 (Rs. 78,000 - Rs. 8,000). This is a good deal for Mrs. Jaya, as she is getting a new TV set for a lower price than the original asking price.
The shop manager is also happy with the deal, as he is still able to make a profit on the sale of the new TV set. This is a win-win situation for both parties involved.
Illustration 13
Raj & co
furnish the following expenditure incurred by them to find the transaction value
for the same purpose of paying GST
|
Particulars |
Amount |
|
Direct
material cost per unit inclusive of IGST at 18% Direct wages Other direct
expenses Indirect
materials Factory
overheads Administration
overheads (25% relating to production capacity) Selling and
distribution expenses Quality
control Sale of scrape
realized Actual profit
margin |
944 250 100 75 200 100 150 25 20 15% |
Find the value
for the purpose of payment of GST as per Rule 30 of CGST Rules 2017,
Ans: The value for the purpose of payment of GST as per Rule 30 of CGST Rules 2017 is calculated as follows:
Cost of production or manufacture = Direct material cost + Direct wages + Other direct expenses + Indirect materials + Factory overheads + Administration overheads + Selling and distribution expenses + Quality control = 944 + 250 + 100 + 75 + 200 + 100 + 150 + 25 + 20 = 1,974
GST value = 110% of cost of production or manufacture = 1.10 * 1,974 = 2,171.40
Therefore, the value for the purpose of payment of GST is 2,171.40.
Note that the sale of scrap realized and the actual profit margin are not included in the calculation of the GST value. This is because the GST is levied on the value of the supply of goods or services, not on the profit made by the supplier.
Illustration 14
XYZ pvt ltd has
provided the following particulars relating to goods sold by it to ABC pvt ltd
|
Particulars |
Amount |
|
List price of
the goods (exclusive of taxes and discount) Tax levied by
municipal authority on the sale of such goods CGST and SGST
chargeable on goods Packing
charges (not included in price above) |
1,25,000 15,000 19,200 15,000 |
XYZ ltd pvt ltd
received Rs 9500 as a subsidy from a Non profit making organization in respect
of timely supply of such goods. The price of Rs 1,25,000 of the goods is after
considering such subsidy . XYZ ltd offer 4% discount on the list price of the
goods which is recoded in the invoice for the goods.
Determine the
value of taxable supply made by XYZ pvt ltd.
Ans The value of taxable supply made by XYZ pvt ltd is calculated as follows:
List price of goods (exclusive of taxes and discount) = 1,25,000
Less: Subsidy received = -9500
Less: Discount offered = -4% of 1,25,000 = -5000
Add: Municipal tax = +15,000
Add: Packing charges = +15,000
Value of taxable supply = 1,19,950
Therefore, the value of taxable supply is 1,19,950.
Note that the subsidy received is not included in the calculation of the value of taxable supply. This is because the GST is levied on the value of the supply of goods or services, not on the profit made by the supplier. The discount offered is also not included in the calculation of the value of taxable supply. This is because the discount is a reduction in the price of the goods, and the GST is levied on the full price of the goods. The municipal tax and packing charges are included in the calculation of the value of taxable supply. This is because these are amounts that the supplier is liable to pay, and they are not included in the price of the goods.
Illustration 15
Compute the
value of taxable supplies if the contracted value of supplies 18,00,000 which
included following
|
Particulars |
Amount |
|
Cost of
primary packing Cost of
protective packing on customer request Design and
drawing charges Pre
installation consultancy charges |
45,000 25,000 1,00,000 50,000 |
Additional
information:
Freight charge
of Rs 65,000 is paid by recipient of behalf of the supplier
Rs 20,000
commission paid to agent by recipient on instruction of supplier.
Contracted value of supplies = 18,00,000
Less: Cost of primary packing = -45,000
Less: Cost of protective packing = -25,000
Less: Design and drawing charges = -1,00,000
Less: Pre installation consultancy charges = -50,000
Add: Freight charge paid by recipient = +65,000
Add: Commission paid to agent = +20,000
Value of taxable supplies = 14,60,000
Note that the freight charge and commission paid by the recipient are included in the calculation of the value of taxable supplies. This is because the GST is levied on the value of all consideration received by the supplier, including any amounts paid by a third party on behalf of the recipient.
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