Determination of Value of Supply when consideration is not solely in money [Rule 27 of CGST rules] - GST Ready Reckoner - GST

Determination of Value of Supply when consideration is not solely in money [Rule 27 of CGST rules ] Determination of Value of Supply Supplies of specified categories of goods or services , Section 15(5) lays down that in respect of certain notified supplies also, the value will be determined in the manner as stipulated in Define in the ( Chapter IV : Determination of value of supply of CGST Rules from rule 27 to 35 ) the rules for valuation. Thus, the methodology of transaction value will not apply for such notified categories of transactions; instead the rules will prescribe a different method of determining value for these notified transactions. Read with rule 27 provides for Taxable value when consideration is not solely in money In some cases, where consideration for a supply is not solely in money, taxable value has to be determined as prescribed in the rules. In such cases following values have to be taken sequentially to determine the taxable value: - (a) be the open market value of such supply; (b) if the open market value is not available under clause (a) , be the sum total of consideration in money and any such further amount in money as is equivalent to the consideration not in money, if such amount is known at the time of supply; (c) if the value of supply is not determinable under clause (a) or clause (b) , be the value of supply of goods or services or both of like kind and quality; (d) if the value of supply is not determinable under clause (a) or clause (b) or clause (c), be the sum total of consideration in money and such further amount in money that is equivalent to consideration not in money as determined by the application of rule 30 or rule 31 of CGST Rules in that order. (i) Value of supply based on cost i.e. cost of supply plus 10% mark-up (ii) Value of supply determined by using reasonable means consistent with principles general provisions of GST law. (Best Judgement method) Open Market Value means the full value in money excluding taxes under GST laws , payable by a person to obtain such supply at the time when supply being valued is made, provided such supply is between unrelated persons and price is the sole consideration for such supply. Supply of like kind quality means any other supply made under similar circumstances that is same or closely resembles in respect of characteristics, quality, quantity, functionality, reputation to the supply being valued. Examples Example 1:- Where a new phone is supplied for ₹ 20000/- along with the exchange of an old phone and if the price of the new phone without exchange is ₹ 24000/-, the open market value of the new phone is ₹ 24000/-. Example 2:- Where a laptop is supplied for ₹ 40000/- along with a barter of printer that is manufactured by the recipient and the value of the printer known at the time of supply is ₹ 4000/- but the open market value of the laptop is not known, the value of the supply of laptop is ₹ 44000/-. Example 3:- Rajesh co. partnership firm, provides professional consultancy services to group of companies for an annual retainership fee of ₹ 10 lakh. Further, the firm is provided with car (along with driver) for the exclusive use throught out year. the fuel cost is also borne by the group of companies. Rajesh co. on the amount of ₹ 10 lakhs. In this case, Rajesh co. gets a car along with driver (including fuel) for the whole year , which is an additional to non-monetary consideration for its services. The monetary value of such additional consideration must be added to the retainer fee ₹10 lakhs in order to arrive at the value of the taxable services provided Rajesh co. as per rule 27 relating to valuation. Example 4:- Sun Enterprises supplied a cooler to an unrelated party , Raj Trader for consideration of ₹ 2,95,000/-(inclusive GST @18%). Raj Trader also gave some material to Sun enterprises [Valuing ₹ 10,000 (exclusive of GST)] as consideration for such supply. At the same time , Sun Enterprises has supplied the same goods to another unrelated person at price 29736 (inclusive of GST @18%). In this case the value will be determined as per rule 27 of CGST Rules, where the consideration for a supply is not wholly in money, the value will be the open market value. therefore, in the given case, the open market value of goods supplied is ₹ 2,52,000/- (₹2,97,360*100/118) and is therefore, the value of such goods. Example 5:- Sun Enterprises supplied a cooler to an unrelated party , Raj Trader for consideration of ₹ 2,95,000/- (inclusive GST @18%). Raj Trader also gave some material to Sun enterprises [Valuing ₹ 10,000 (exclusive of GST)] as consideration for such supply and open market value of goods not available. In this case, If open market value of the supply is not know, the value of the supply will be the consideration in money plus the money equivalent to the non-monetary consideration, if such amount is know at the time of supply. therefore the value in the given case will be (₹ 2,95,000 x 100/118)+ ₹ 10,000, which is ₹ 2,60,000/-.