After the enactment of CGST Act 2017, the GST council also finalised the valuation rules to be applied in case of certain set of situations/ circumstances.
Broadly, under the GST regime following references have been made in context of the valuation of Goods and Services-
The brief of the various applicable provisions have been mentioned below, however the detailed analysis have been presented in the form of a Power Point presentation, uploaded/attached herewith.
Basis for valuation of a taxable supply under GST
The basis for valuation of supply of goods/ and services under the GST regime is the “Transaction Value” of Goods/ and services. However under the existing law, Excise duty payable on one of following basis
As per Sec 15(1) of the CGST Act 2017,
The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply.
Conditions for the applicability of Sec 15(1)
Inclusions and Exclusions in the Value of Supply-Sec 15(2 & 3) of the CGST Act 2017 explains the specific items of inclusions and exclusions while determining the transaction value for the supply of goods/ services. For details refer Power Point presentation, uploaded/attached herewith.
Sec 15(4) explains that, Where the value of the supply of goods or services or both cannot be determined under sub-section (1), the same shall be determined in such manner as may be prescribed.
|Where the consideration is not wholly in money
|Supply is between distinct/related persons, other than through an agent
|Supply made or received through an agent
|Supply based on cost
|Determination of value in respect of certain supplies
|Value of supply of services in case of pure agent
|Rate of exchange of currency, other than Indian rupees, for determination of value
|Value of supply inclusive of integrated tax, central tax, State tax, Union territory tax
For details refer Power Point presentation, uploaded/attached herewith.
Valuation rules have given broad guidelines as to what will be the value on which GST is required to be paid on goods and services. The Govt has tried to take keen steps for presenting these rules in a lucid form for facilitating ease of business and reducing the probable causes of litigations which have been raised in the existing laws. We hope that this new tax structure will bring a positive revolution for the future of India.