Consideration – Sec 2(31)
Consideration in relation to the supply of goods or services includes:
(a)Any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for inducement of, the supply of goods or services, whether by recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government.
(b)The monetary value of any act or forbearance, whether or not voluntary, in respect of, in response to, or for the inducement of, the supply of goods or services, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government.
PROVIDED that a deposit, whether refundable or not , given in respect of the supply goods or services shall not be considered as payment made for the supply unless the supplier applies the deposit as consideration for the supply.
- Consideration, therefore, is not the amount that the recipient pays but the amount that the supplier collects whether from the recipient or any third party. This would be particularly relevant in dealing with complex arrangements in digital economy and new-age business.
- Merely altering the nomenclature of the payment as “deposit” cannot defer the tax liability. Usage of trade and popular understanding of the terms play an important role in identifying whether deposit is really a deposit or not.
- Third party to a contract can also contribute consideration.
- Consideration can be in the form of money or otherwise. E.g.: Under a JDA model, the flats handed by the developer to the landowner will be considered as ‘consideration’ for the development rights given to the developer by the landowner;