Q 1. What is the value of taxable supply to be adopted for the levy of GST?
Ans. The value of taxable supply of goods and services shall
ordinarily be ‘the transaction value’ which is the actually the price paid or
payable, when the parties are not related and price is the sole consideration.
The MGL further elaborates various inclusions and exclusions from the ambit of
transaction value. For example, the transaction value shall not include
refundable deposit, discount allowed before or at the time of supply.
Q 2. What is transaction value?
Ans. Transaction value refers to the price actually paid or payable
for the supply of goods and or services where the supplier and the recipient
are not related and price is the sole consideration for the supply. It includes
any amount which the supplier is liable to pay but which has been incurred by
the recipient of the supply.
Q 3. Are there separate valuation provisions for CGST, SGST
and IGST and Goods and Services?
Ans. No, section 15 is common for all three taxes and also common
for goods and services.
Q 4. Is contract price not sufficient to determine valuation
of supply?
Ans. Contract price is more specifically referred to as ‘transaction
value’ and that is the basis for computing tax. However, when the price is
influenced by some factors like relationship of parties or certain transactions
are deemed to be supply, which do not have a price, it is required to overcome
these factors to determine the transaction value correctly.
Q 5. Is reference to Valuation Rules required in all cases?
Ans. No. Reference to Valuation Rules is required only in cases
listed under section 15(4) i.e., where consideration payable is not money, or
parties to the transaction are related.
Q 6. What is to be done if there are certain factors affecting
price though the transaction is not covered by section 15(4)?
Ans. Section 15(2) provides the list of adjustments that may
be made to make the price of a transaction reliable for purposes of determining
tax payable.
Q 7. Can the transaction value declared under section 15(1)
be accepted?
Ans. Yes, it can be accepted after examining for inclusions in
section 15(2). Furthermore, the transaction value can be accepted even where
the supplier and recipient are related, provided the relationship has not
influenced the price. (Rule 3(4) of draft GST valuation rules)
Q 8. Whether post-supply discounts or incentives are to be
included in the transaction value?
Ans. Yes. Unless the post-supply discount is established as per
the agreement and is known at or before the time of supply and specifically
linked to relevant invoice.
Q 9. Whether pre-supply discounts allowed before or at the
time of supply are includible in the transaction value?
Ans. No, provided it is allowed in the course of normal trade
practice and has been duly recorded in the invoice.
Q 10. When are Valuation Rules applicable?
Ans. Valuation Rules are applicable when (i) Consideration not
in money terms; (ii) parties are related or supply by any specified category of
supplier; and (iii) transaction value declared is not reliable.
Q 11. What are the reasons for doubting transaction value
declared?
Ans. The reasons have been indicated in Rule 7(b) of the draft
GST Valuation Rules. It is:- (i) comparable supplies are at significantly higher
value; (ii) transaction is at significantly lower or higher than market value
of supplies; and (iii) misdeclaration in parameters like description, quantity,
quality, year of make etc. The list is indicative and not exhaustive.
Q 12. What are the methods provided for determining the
value, in terms of draft GST Valuation Rules?
Ans. Three methods are prescribed under GST Valuation Rules
for determining the transaction value i.e., comparative method, computation
method and residual method, which are required to be followed sequentially.
Besides, some specific valuation methods have been specified like in case of
pure agents and money changers. Further specific rules may later be notified in
case of Insurer, Air travel Agent and distributor or selling agents of lottery.
Q 13. What are the inclusions specified in Section 15(2)
which could be added to Transaction Value?
Ans. The inclusions specified in Section 15(2) which could be
added to Transaction Value are as follows:
a) Any amounts paid by recipient that are obligation of
supplier to pay;
b) Money value of goods or services provided free or at
concession by recipient;
c) Royalties and license fees payable by recipient as a
condition of supply;
d) Taxes levied under any other law(s) (other than SGST /
CGST or IGST);
e) Expenses incurred by supplier before supply and charged
separately;
f) Subsidy realized by supplier on the supply;
g) Reimbursements claimed separately by supplier;
h) Discounts allowed ‘after’ supply except when known before
supply; (Discounts allowed as a normal trade practice and reflected on the face
of the invoice shall not be included).