GST Valuation Rules (Goods and Services Tax) – (Grade A)

Summary:

The GST Valuation Rules (Goods and Services Tax) establish the method for determining the value of supply based on certain conditions. If these conditions are not met, alternative valuation methods are used. Key rules address various scenarios, including the value of supply with non-monetary considerations, supplies between related parties, value based on cost, and residual valuation methods. Additional rules cater to specific situations, such as agent-based supplies, currency exchange rates, and tax calculation when value includes GST.

Excerpt:

GST Valuation Rules (Goods and Services Tax)

Value of Supply – Valuation Rules

• Normally the 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)

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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.

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Rule 28- Value of supply of goods or services or both between distinct or related persons, other than through an agent

Option
Where 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 from his unrelated customer.