Determination of Value of Supplies _Certain Cases

Valuation of Supplies where the consideration is not wholly in money

Where the supply of goods or services is for a consideration not wholly in money, the value of the supply shall:-

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 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 in that order i.e. the consideration in money plus the money equivalent of the non-money consideration, as worked out based on cost of the supply plus 10% mark-up

For Ex- A new TV is supplies for Rs. 30000 along with the exchange of an old TV and if the price of the new TV without exchange is Rs. 42000, the open market value of the new TV is Rs. 42000.

Value of Supplies between distinct or related persons, other than through an agent:-

GSTThe value of the supply of goods or services or both between distinct persons as specified in section 25(4) and (5), or where the supplier and recipient are related, other than where the supply is made through an agent shall-

a) Be the open market value of such supply;

b) If the open market value is not available, be the value of supply of goods or services of like kind and quality;

c) If the value is not determinable under clause (a) or (b), be the value as determined by the application of Rule 30 or rule 31, in that order i.e it must be worked out based on the cost of the supply plus 10% mark-up or by other reasonable means, in that sequence.

Clarification:-

→ A person who has obtained or is required to obtain more than one registration, whether in one state or union territory or more than one state or union territory shall, in respect of each such registration, be treated as distinct persons for the purpose of this Act.

→ Where a person who has obtained or is required to obtain registration in a state or union territory in respect of an establishment, has an establishment in another state or union territory, then such establishments shall be treated as establishments of distinct persons for the purposes of this Act.

Value of Supply of services in relation to purchase or sale of foreign currency, including money changing: –

i) For a currency, when exchanged from, or to, Indian Rupees (INR), the value shall be equal to the,-

Case Value of Supply
Purchase of foreign currency by service supplier (RBI reference rate at that time- Buying rate) x Total units of currency.
Sale of foreign currency by service supplier (Selling rate-RBI reference rate at that time) x Total units of currency.

ii) If RBI reference rate is not available:- In case where the RBI reference rate for a currency is not available, the value shall be 1% of the gross amount of Indian Rupees provided or received, by the person changing the money. 

iii) In case where neither of the currencies exchanged in Indian Rupees:- In case where neither of the currencies exchanged in Indian Rupees, the value shall be equal to 1% of the lessor of the two amounts the person changing the money would have received by converting any of the two currencies into Indian Rupees on that day at the reference rate provided by RBI.

i.e

Amount 1= Foreign currency sold x RBI reference rate of that currency to Indian Rupees

Amount2=Foreign currency bought x RBI reference rate of that currency to Indian Rupees

Gross Indian Rupees = Amount 1 or Amount 2, whichever is less
Value = 1% of the Gross Indian Rupees

 There is an option available to supplier to determine value in relation to supply of foreign currency, including money changing- Hence if supplier of services so chooses value shall be determined as—

S.No. Amount Value of supply shall be determined at the rate of
(1) Upto Rs. 1,00,000 ♦ 1% of the gross amount of currency exchanged; or

♦ Rs 250

Whichever is higher

(2) Exceeding Rs. 1,00,000 and upto Rs. 10,00,000 ♦ Rs. 1000 + 0.5% of the gross amount of currency exchanged
(3) Exceeding Rs. 10,00,000 ♦ Rs. 5,500 + 0.1% of the gross amount of currency exchanged; or

♦ Rs. 60000,

Whichever is lower

Note: Such option shall not be withdrawn during the remaining part of that financial year.    

Value of supply of services in relation to life insurance business: 

  • If the amount allocated for investment/ savings is intimated to the policy holder at the time of the supply of service: The gross premium charged from a policy holder reduced by the amount allocated for investment, or savings on behalf of the policy holder, if such an amount is intimated to the policy holder at the time of supply of service;
  • In case of single premium annuity policies: In case of single premium annuity policies other than (a), 10% of single premium charged from the policy holder; or
  • In other cases: In all other cases, 25% of the premium charged from the policy holder in the first year and 12.5% of the premium charged from the policy holder in subsequent years.

Note: Nothing contained above shall apply where the entire premium paid by the policy holder is only towards the risk cover in life insurance.       

The author can be reached at [email protected] or www.advalueadvisors.com

Author Bio

Qualification: CA in Job / Business
Company: N/A
Location: New Delhi, New Delhi, IN
Member Since: 17 Jan 2018 | Total Posts: 3

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