TaxTMI 
TaxTMI 
Valuation in GST
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....nd also common for goods and services. Q 4. Is contract price not sufficient to determine valuation of supply? Ans. Contract price is more specifically referred to as 'transaction value' and that is the basis for computing tax. However, when the price is influenced by factors like relationship of parties or where certain transactions are deemed to be supply, which do not have a price, the value has to be determined in accordance with the GST Valuation Rules. Q 5. Is reference to GST Valuation Rules required in all cases? Ans. No. Reference to GST Valuation Rules is required only in cases where value cannot be determined under subsection (1) of Section 15. Q 6. Can the transaction value declared under section 15(1) be accepted? Ans. Yes, if all the conditions specified therein have been fulfilled. Q 7. Whether post-supply discounts or incentives are to be included in the transaction value? Ans. Yes. However, where the post-supply discount is established as per the agreement which is known at or before the time of supply and where such discount specifically linked to the relevant invoice and the recipient has reversed input tax credit attributable to such discount, the disco....
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....ignored Q 12. How will goods re-possessed from defaulting borrowers be valued? Ans. The proviso to Rule 32(5) of the CGST Rules provides that in case of the purchase value of goods repossessed from an unregistered defaulting borrower, for the purpose of recovery of a loan or debt shall be deemed to be the purchase price of such goods by the defaulting borrower reduced by five percentage points for every quarter or part thereof, between the date of purchase and the date of disposal by the person making such repossession. Q 13. How will works contract service provided by a builder/developer to a prospective flat buyer be valued under GST? Ans. In case of supply of construction service (works contract), involving transfer of property in land or undivided share of land, as the case may be, the value of supply of service and goods portion in such supply shall be equivalent to the total amount charged for such supply less the value of land or undivided share of land, as the case may be, and the value of land or undivided share of land, as the case may be, in such supply shall be deemed to be one third of the total amount charged for such supply. "Total amount" means the sum total of,....
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....will be particularly relevant in cases where supply is between related persons, or between distinct persons (entities having same PAN but different GSTIN) and between principal and agent. Q 19. How will value be determined in cases where the consideration for supply is not wholly in money? Ans. Value of supply where the consideration is not wholly in money will be: - a) Open market value of such supply b) if open market value is not available, value shall 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 value cannot be determined as above, it shall be the value of supply of goods or services or both of like kind and quality. d) if value is not determinable under clause (a) or clause (b) or clause (c), value shall 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 application of rule 30 or rule 31 of Valuation Rules in that order. Q 20. What is meant by supply of goods or services of like kind and quality? Ans. "Supply of goods or services or both of li....
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....trol a third person; or (viii) they are members of the same family; (ix) Persons who are associated in the business of one another in that one is the sole agent or sole distributor or sole concessionaire, howsoever described, of the other, shall be deemed to be related. It may be noted that the term "person" also includes legal persons. Q 25. How will value be arrived at when supply is between related persons or distinct persons as specified in sub-section (4) and (5) of section 25 (other than an agent)? Ans. The value of the supply of goods or services or both in such cases shall, - (a) be the open market value of such supply; (b) if open market value is not available, be the value of supply of goods or services of like kind and quality; (c) if value is not determinable under clause (a) or (b), be the value as determined by application of rule 30 or rule 31, in that order: In case 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 Furthe....
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....ault by the buyer), and for this reason the commission paid to the DCA may be relatively higher than that paid to a normal agent. In order to guarantee timely payment to the supplier, the DCA can resort to various methods including extending short-term transaction-based loans to the buyer or paying the supplier himself and recovering the amount from the buyer with some interest at a later date. Q 29. Whether the temporary short-term transaction based loan extended by the DCA to the recipient (buyer), for which interest is charged by the DCA, is to be included in the value of goods being supplied by the supplier (principal) where DCA is not an agent under Para 3 of Schedule I of the CGST Act? Ans. If the DCA being not an agent under Para 3 of Schedule I of the CGST Act, the temporary short-term transaction based loan being provided by DCA to the buyer is a supply of service by the DCA to the recipient on Principal to Principal basis and is an independent supply. Therefore, the interest being charged by the DCA would not form part of the value of supply of goods supplied (to the buyer) by the supplier. (CBIC Circular No. 73/47/2018-GST dated 5th November, 2018) Q 30. Where DCA is ....
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....oney changing, shall be deemed to be (i) one per cent. of the gross amount of currency exchanged for an amount up to one lakh rupees, subject to a minimum amount of two hundred and fifty rupees; (ii) one thousand rupees and half of a per cent. of the gross amount of currency exchanged for an amount exceeding one lakh rupees and up to ten lakh rupees; and (iii) five thousand rupees and one tenth of a per cent. of the gross amount of currency exchanged for an amount exceeding ten lakh rupees, subject to maximum amount of sixty thousand rupees. If the above option is given, such option shall not be withdrawn during the remaining part of that financial year. Q 32. What would be the value of supply of services provided by an Air Travel Agent? Ans. The value of supply of services in relation to booking of tickets for travel by air provided by an air travel agent, shall be deemed to be an amount calculated at the rate of 5% of the basic fare in the case of domestic bookings, and at the rate of 10% of the basic fare in the case of international bookings of passage for travel by air. The expression "basic fare" means that part of the air fare on which commission is normally paid t....