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Valuation in GST

Goods and Services Tax - GST Law and Procedure - 08 - Value of Supply Every fiscal statue makes provision for the determination of value as tax which is normally payable on ad-valorem basis. In GST also, tax is payable on ad-valorem basis i.e percentage of value of the supply of goods or services. Section 15 of the CGST Act and Determination of Value of Supply, CGST Rules, 2017 contain - provisions related to valuation of supply of goods or services made in different circumstances and to differe .....

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ied under any law other than GST law, expenses incurred by the recipient on behalf of the supplier, incidental expenses like commission & packing incurred by the supplier, interest or late fees or penalty for delayed payment and direct subsidies (except government subsidies) are required to be added to the price (if not already added) to arrive at the taxable value. Exclusion of discounts Discounts like trade discount, quantity discount etc. are part of the normal trade and commerce. Therefo .....

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t 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: i. Open Market Value of such supply ii. Total money value of the supply i.e. monetary consideration plus money value of the non-monetary consideration iii. Value of supply of like kind and quality iv. Value of su .....

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lity means any other supply made under similar circumstances, is same or closely resembles in respect of characteristics, quality, quantity, functionality, reputation to the supply being valued. Illustration: (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/-. (2) Where a laptop is supplied for ₹ 40000/- along with a bar .....

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persons have been specified and as relation may influence the price between two related persons therefore special valuation rule has been framed to arrive at the taxable value of transactions between related persons. In such cases following values have to be taken sequentially to determine the taxable value: - i. Open Market Value ii. Value of supply of like kind and quality. iii. Value of supply based on cost i.e. cost of supply plus 10% mark-up. iv. Value of supply determined by using reasona .....

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t to his unrelated customer. Value of supply of goods made or received through an agent (a) Open market value of goods being supplied, or, at the option of the supplier, 90% of the price charged for the supply of goods of like kind and quality by the recipient to his unrelated customer. Illustration: Where a principal supplies groundnut to his agent and the agent is supplying groundnuts of like kind and quality in subsequent supplies at a price of ₹ 5000/- per quintal on the day of supply. .....

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st 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) Value of supply of services in case of a Pure Agent Subject to fulfilment of certain conditions, the expenditure and costs incurred by the supplier as a pure agent of the recipient of supply of service, has to be excluded from the value of supply. Illustration Corporate services firm A is engaged to handle the leg .....

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Determination of value in respect of few specific supplies Methods to determine Taxable value of following five specific supplies have also been prescribed under valuation Rules. These can be used by the supplier if he so desires. (a) Purchase or sale of foreign currency including money changing (b) Booking of tickets for air travel by an air travel agent (c) Life insurance business (d) Value of supply of Second hand goods (e) Value of redeemable vouchers/Stamps/Coupons/tokens The special provis .....

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rrency is not available then taxable value is 1% of the gross amount of Indian Rupees provided/ received by the person changing the money. Case 2: Transaction where neither of the currencies exchanged is Indian Rupees Taxable value will be 1% of the lesser of the two amounts the person changing the money would have received by converting (at RBI reference rate) any of the two currencies in Indian Rupees. Option-2 The person supplying the service may also exercise the following option to ascertai .....

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nged for an amount exceeding ten lakhs rupees subject to a maximum amount of sixty thousand rupees Special provision related to determination of value of service of booking of tickets for air travel by an air travel agent Taxable value is 5% of basic fare in case of domestic travel and 10% of basic fare in case of international travel. Basic fare means that part of the air fare on which commission is normally paid to the air travel agent by the airline. The expression basic fare means that part .....

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me of collection of premium. • Single premium annuity policy where allocation for investments and savings is not intimated to the policy holder - taxable value is ten percent of the single premium charged from the policy holder. • Other cases- Twenty five percent of premium charged from the policy holder in the first year and twelve and a half percent of premium charged for subsequent years. However, where insurance policy has benefit of risk coverage only, then taxable value is entire .....

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d. Persons who purchase second hand goods after payment of tax to supplier of such goods will be governed by this valuation rule only when they do not avail input tax credit on such input supply. If input tax credit is availed, then such supply will be governed by normal GST valuation. Value of supply of goods repossessed from a defaulting borrower If the defaulting borrower is not a registered person, the purchase value will be purchase price in the hands of such borrower reduced by five percen .....

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