Valuation of Cross Charge

[THDC India]

Dear Expert,

Kindly share your valuable opinion on following matter:

While cross charge, whether GST component should be reduced from the taxable value due to provision of section 15(2)(a) and thereafter GST should be levied on value obtained after reducing GST component.

AI Summary

Valuation of cross charge: GST cannot be excluded from taxable value unless recipient is eligible for full input tax credit.
No deduction of GST from the taxable value is permitted for valuation; valuation must follow statutory valuation provisions and rules. Where the recipient is eligible for full input tax credit, the invoice value may be treated as the open market value and parties may adopt an agreed value for cross charges. If the recipient cannot claim input tax credit, the valuation rules do not support excluding GST from the taxable value.