In the realm of Goods and Services Tax (GST), understanding the determination of the value of supply is paramount for businesses to comply with regulatory requirements. Rules 27 to 31 under GST provide a framework for assessing the value of supply in various situations. From transactions involving non-monetary consideration to those between related persons, these rules encompass diverse scenarios. Let’s delve into the intricacies of Rules 27 to 31 and elucidate the methods for valuing goods and services under GST.
| Lets Discuss Rule 27 to 31 under GST for value of supply under various situation | |||||
| DETERMINATION OF VALUE OF SUPPLY | |||||
| Particulars | Rule 27 | Rule 28 | Rule 29 | Rule 30 | Rule 31 |
| Applicability | Value of supply of goods or services where the consideration is not wholly in money | Value of supply of goods or services or both between distinct or related persons, other than through an agent | Value of supply of goods made or received through an agent | Value of supply of goods or services or both based on cost | Residual method for determination of value of supply of goods or services or bot |
| i.e.it may involve barter system or exchange or nonmonetary consideration | Distinct persons are persons with different GSTINs belong to one legal entity (single PAN) situated within the same State or in two different States or in a different country. | Transaction between Agent & Prinicipal | NA | NA | |
| Method of valuation | a) Open market Value of supply | same as rule 27 | same as rule 27 | NA | NA |
| b) if a) is not available then 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; | NA | NA | NA | NA | |
| c) if a)or b) both are not available then value of indentical (like) goods or services | same as rule 27 | NA | NA | NA | |
| d) if a),b),c) or d) not available the rule 31 & 32 | same as rule 27 | same as rule 27 | NA | NA | |
| Provided that where the goods are intended for further supply as such by the recipient, the value shall, at the option of the supplier, be an amount equivalent to ninety percent of the price charged for the supply of goods of like kind and quality by the recipient to his customer not being a related person | At the option of the supplier, be ninety percent. of the price charged for the supply of goods of like kind and quality by the recipient to his customer not being a related person, where the goods are intended for further supply by the said recipient. | Where the value of a supply of goods or services or both is not determinable by any of the preceding rules of this Chapter, the value shall be one hundred and ten percent of the cost of production or manufacture or the cost of acquisition of such goods or the cost of provision of such services. | Where the value of supply of goods or services or both cannot be determined under rules 27 to 30, the same shall be determined using reasonable means consistent with the principles and the general provisions of section 15 and the provisions of this Chapter: Provided that in the case of supply of services, the supplier may opt for this rule, ignoring rule 30. | ||
| Provided further that where the recipient is eligible for full input tax credit, the value declared in the invoice shall be deemed to be the open market value of the goods or services. | |||||
| Illustration: | 1) Where a new phone is supplied for twenty thousand rupees along with the exchange of an old phone and if the price of the new phone without exchange is twenty four thousand rupees, the open market value of the new phone is twenty four thousand rupees. | 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 Rs. 5,000 or Another independent supplier is supplying groundnuts of like kind and quality to the said agent at the price of Rs. 4,550 Then value of the supply made by the principal shall be Rs. 4,550 per quintal or where he exercises the option, the value shall be 90 per cent. of Rs. 5,000 i.e., 4,500 per quintal | |||
Conclusion: Navigating through the complexities of GST rules pertaining to the determination of the value of supply is essential for businesses to ensure compliance and avoid penalties. By grasping the provisions outlined in Rules 27 to 31, businesses can accurately assess the value of their supplies across different scenarios. Adhering to these rules not only fosters transparency but also facilitates seamless operations within the ambit of GST regulations.
Author Bio
nicely explained Karishma
Thank you Sir