Concept of Valuation under GST !

Concept of Valuation under GST !


gst valuation

Valuation of Goods and/or Service under GST:

According to Section 15 of the CGST Act, 2017 Value of supply is transaction value. Means price paid or payable for the supply provided the supplier and the recipient are not related to each other and price is the sole consideration.

Inclusions in the Transaction Value [Section 15(2)]
  1. Amount incurred by recipient and not included in price which supplier is liable to pay.
  2. Appropriate value of goods, services supplied by recipient free of charge or at a reduced cost to the extent that such value is not included in the price;
  3. Any duties, taxes, fees and charges other than GST Act.
  4. Incidental expenses like commission and packing, etc, charged by supplier.
  5. Subsidies (excluding the services provided by a Government) directly linked to the price
  6. Any reimbursable expenditure or cost incurred by or on behalf of supplier and charged in relation to the supply.
gst valuation


Exclusions from the Transaction Value [Section 15(3)]

The value of the supply shall not include any discount that is give. :

(a) Discount given before or at the time of the supply provided such discount has been duly recorded in the invoice issued in respect of such supply; and

(b) Discount given after the supply has been effect but:

(i) such discount is establish in terms of an agreement entered into at or before the time of such supply and specifically linked to relevant invoice; and

(ii) Input tax credit has been reversed by the recipient of the supply as is attributable to the discount issued by the supplies.


Valuation in case of Pure Agent:

Pure Agent is a person who –

a) Enters into contractual agreement with the recipient of service to act as his pure agent to incur costs in course of providing taxable service

b) Neither intends to hold nor holds any title to goods or services, nor uses the same.

c) Receives only the actual amount incurred to procure the goods or services.

From the value of supply, the expenditure or costs incurre by a Pure Agent (service provider) shall be exclude if following conditions are satisfy –

  1. The service provider acts as a pure agent of the recipient of service when he makes payment to third party for the goods or service procured
  2. The recipient of service receives and uses the goods or services so procured by the service provider in his capacity as a pure agent of the recipient of service.
  3. The recipient of service is liable to make payment to the third party.
  4. Recipient of service authorizes the service provider to make payment on his behalf.
  5. Recipient of service knows that the services shall be provided by third party.
  6. The payment make by the service provider on behalf of recipient has been separately indicate. In invoice issued by the service provider.
  7. The service provider recovers from the recipient only such amount equal to the payment made by him to third party.
  8. The goods or service procured by the service provider from the third party. As a pure agent of the recipient are in addition to the services he provides on his own account.

gst valuation


About the Author 

Name : CA Monika Rathi

Author is a CA

Disclaimer: Author of this write up intends to impart the knowledge of the amendment made by the Government regulatory and step taken to ease the compliance. Author is nowhere liable for any damage or indirectly and it is advisable to the viewers to consult their professional expertise to seek the advice.       



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