Value of taxable supply of goods and services :
♦ Transaction value when price is sole consideration and supplier and recipient are not related is basis of valuation.
♦ IGST, CGST, UTGST and SGST charged on supply will not be includible in value, but other taxes, if any will be includible.
♦ Incidental expenses incurred before supply like packing, testing, weighment includible in ‘value’.
♦ Interest, late fee or penalty for delayed payment is includible in ‘value’ for purpose of GST.
♦ Amount paid by recipient on behalf of supplier includible in value.
♦ Subsidies directly linked to supply includible but not subsidies received from Government.
♦ Discount not includible in ‘value’ if it was known before or at the time of supply (even if given later). However, deduction of discounts given after supply will not be available if such discount was not contemplated or known at the time of supply.
♦ The phrase ‘price is sole consideration’ has been copied from excise law. Hence, issues of addition of value of drawings, tools, dies, patterns, free material supplied by recipient, free supplies, reimbursement of expenses will arise.
♦ In case of barter or exchange of old goods for new goods, value will be on basis of ‘open market price’ or adding value of old goods.
♦ Price charged to related person or distinct persons with same PAN will be accepted if it is open market value or price of like kind of goods or services.
♦ In case of supply of goods by Principal to Agent, price will be ‘open market value’ or at the option of supplier, 90% of price charged by agent to his customer who is not related person.
♦ Open Market Value means full value in money excluding taxes when buyer and seller are not related and price is sole consideration. The value should be at same time when supply being valued is made.
♦ ‘Open Market Value’ depends on many factors including brand image, class of buyer e.g. Open Market Value in wholesale and retail cannot be same. Open Market Value of Lux soap and soap of local manufacturer cannot be same.
♦ If value is not ascertainable by aforesaid methods, it will be 110% of cost of production or manufacture or cost of acquisition of such goods or cost of provision of such services [rule 4]. Otherwise, on reasonable basis under rule 5.
♦ Supplier of service can opt for rule 5 disregarding rule 4 i.e. on reasonable basis and not on basis of cost of service.
♦ In case of following services, composition schemes as specified in Valuation Rules will apply –
(a) Sale or purchase of foreign currency
(b) Booking of air tickets
(c) Life Insurance Business
(d) Buying and selling second hand goods
(e) Value of token, voucher or coupon
♦ If supplier incurs some expenditure as pure agent of recipient and recovers actual amount from recipient, that amount is not includible in value, if it is not part of his service.