Valuation of goods under GST -

[MohanLal tiwari]

Dear Experts,

We have an order for manufacture & supply of machinery wherein customer is providing some free issue imported spares but the custom duty and clearing charges etc are being paid by us. As per Excise valuation Rules, the landed cost of such free issue was included in assesable value.

Kindly advise whether the free issue mtls value is to be included in value for charging GST. As per section 5 of IGST Act read with section 15 of the CGST Act“ 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.”

[ANITA BHADRA]

Dear Sir

The IGST Act, 2017 provides that the integrated tax on goods imported into India shall be levied and collected in accordance with the provisions of the Customs Tariff Act, 1975on the value as determined under the said Act at the point when duties of customs are levied on the said goods under the Customs Act, 1962.

In my opinion , free issue mtls value is to be included in value for charging GST as the value of the goods for the purpose of levying integrated tax shall be, same as chargeable on that article under any law for the time being in force.

Regards

[Rajagopalan Ranganathan]

Sir,

As per Section 15 (2) (b) of CGST Act, 2017 "the value of supply shall include any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods or services or both."

Value of free supply materials by the recipient of the supply is to be included in the transaction value, if the same is not included in the price. If the transaction value is already loaded with the value of free supply material no further addition is required.

How can you pay custom duty and clearing charges when the materials are imported by the recipient of the supply. Please clarify.

[Kishan Barai]

Respected Rajagopalan Ranganathan Ji,

When a merchant exporter import products like OCC waste papers then he does not get exemption of BCD in import duty, BCD exemption in products like OCC waste papers is only available to registered manufacturing unit. So when products like OCC waste papers imported by merchant it is generally cleared by MFG unit to get exemption of BCD. Merchant provides bill to CIF (for example : CIF, Mundra Port) & provide bill upto it with GST of 5%, MFG unit pay IGST of 5% while filing B/E for home consumption and get ITC claim.

Cordially Yours,

Kishan Barai

AI Summary

Valuation of supply under GST: include free issue materials' value in transaction value when not reflected in price. Valuation under GST must include amounts the supplier is liable to pay but which the recipient has paid; free issue materials supplied by a customer should be included in the transaction value if not already reflected in the price. For imports, integrated tax is levied on the customs valuation at the point duties are assessed, making the landed/customs value of free issue imported spares relevant to GST valuation; where the transaction value already includes those materials, no further addition is needed.