GST Valuation Rules (Grade A)

Summary:

This GST Valuation Rules note explains the Value of Supply is determined through the Transaction Value Method, which is based on two conditions. If these conditions aren’t met, valuation follows the rules under the Goods and Service Tax (CGST) Rules, 2017. Examples of these rules include Rule 27 (open market value), Rule 28 (value of supply between distinct or related persons), Rule 30 (value based on cost), and Rule 31 (residual method). These rules provide different approaches to determine the value of supply for goods or services in various situations

Excerpt:

GST Valuation Rules

Value of Supply – Valuation Rules

• Normally a value of supply is to be determined as per Transaction  Value Method (TV Method)
• However, the TV Method is based on two conditions
• Hence, if any of the two conditions is not fulfilled then valuation is to be done as per the prescribed rules
• Goods and Service Tax (CGST) Rules, 2017 – Determination of the value of supply (Listed as under).

….

Examples (Rule 27)

(1) Where a new phone is supplied for twenty thousand rupees along with the exchange of an old phone and if the price of the new phone without exchange is twenty-four thousand rupees, the open market value of the new phone is twenty-four thousand rupees.

(2) Where a laptop is supplied for forty thousand rupees along with the barter of a printer that is manufactured by the recipient and the value of the printer known at the time of supply is four thousand rupees but the open market value of the laptop is not known, the value of the supply of the laptop is forty-four thousand rupees.

….

Rule 30- Value of supply of goods or services or both based on cost

Cost of supply plus 10%.

Rule 31- Residual method for determination of the value of supply of goods or services or both

Determined using reasonable means i.e. Best Judgement method.