Provisions of value of taxable supply

Sec 15(1) - Transaction value is the value of supply

According to sec 15(1), the transaction value of the supply is considered to be the price
actually paid or payable for the supply of goods/services, considering that there is no
other relation between the supplier and recipient of supply and price is the sole
consideration.

Sec 15(2) - inclusions in value of supply

The following are added to the value of supply
● Any cess, tax, duties, fees and charges except GST
● An payment made to third party by recipient on behalf of supplier in relation to the
supply
● Interest, late fee and penalty for delayed payment in relation to supply
● Incidental expenses (commission, packing) charged by supplier in relation to
supply during or before the delivery of goods and services.
● Subsidy linked to the price excluding subsidy given by the govt

Sec 15(3) - Exclusion of discount from transaction value

The value of the supply shall not include any discount which is given

1. before or at the time of the supply if such discount has been duly recorded in the
invoice issued in respect of such supply; and
2. after the supply has been effected, if (i) such discount is established in terms of an
agreement entered into at or before the time of such supply and specifically linked
to relevant invoices; and (ii) input tax credit as is attributable to the discount on
the basis of document issued by the supplier has been reversed by the recipient of
the supply.

Sec 15(4) when sec 15(1) is not applicable

When value of goods and services cannot be determined under section 15(1)
 ● Rule 27 - valuation rule where consideration is not wholly in money.
It is applicable in following cases - barter transaction, exchange transaction, permanent
transfer of business where input tax credit has been availed.
Method of valuation -
- Open market value of such supply
- If open market value of supply is not known, the consideration in money + money
equivalent of the non-monetary consideration
- If the value cannot be determined under the prev 2 clauses, the value of supply of
similar kind of goods
- If none of the above methods, then first rule 30 is to be applied {cost based
valuation} and then rule 31 if rule 30 is not feasible {best judgement method}

● Rule 28 - value of supply of g&s other than through an agent

- The open market value is taken. If the recipient is eligible to take full input tax
credit then the value declared in the invoice shall be deemed to be the open market
value of goods or services
- If open market value of supply not available then the value of similar kinds of
goods/services
- When both are not applicable, the value is determined by application of rule 30
&31 in that order.

● Rule 29 - value of supply of g&s through an agent

- When open market value of supply is available (i) open market value of goods
supplied or (ii) 90% of the price charged for the supply of goods of like kind,
where the goods are intended for further supply
- Value determined by application of rule 30 & 31 in that order.

EXEMPTIONS FROM GST

The power to grant exemptions from GST has been granted vide sec 11 of CSGT Act and
sec 6 of IGST act. List of services exempted from GST are as follows
 A. Trust activities
1. Entry 9D - Services by an old age home run by central govt, state govt or by an
entity registered under sec 12AA of income tax act 1961, to its residents (aged 60
yrs or more) against consideration upto 25,000 pm, per member.
2. Entry 80 - services by way of training or coaching in recreational activities relating
to art and culture, sports by charitable entities under sec 12AA

B. Agriculture and animals

1. Entry 53A - services by the way of fumigation in a warehouse of agricultural
produce
2. All activities of farming are included
3. Entry 57 - services by way of packing fruits or vegetables
4. Entry 24 - service by way of loading, unloading, packing, storage and
warehousing or rice

C. Govt related exemptions

1. Entry 3 - pure services provided to the central, state/UT or any govt authority by
way of any activity
2. Entry 9C - The supply of service by a govt entity is available only if consideration
is received from the CG,SG in form of grants
3. Entry 59 - services by a foreign diplomatic mission located in india
4. Entry 61A - services by way of granting national permit to a goods carriage to
operate throughout india.

D. Exemp related to transport

1. Entry 9B - supply of services associated with cargo to nepal and bhutan
2. Entry 19 - services by way of transportation of goods by an aircraft from a place
outside India up to the customs station of clearance in india
3. Entry 19C - satellite launch services supplied by ISRO, Antrix corporation ltd or
new stace india ltd are exempted.
4. Entry 21A - services provided by goods transport agency to an unregistered person
including unregistered taxable person

E. exemptions related to bank

 1. Entry 26 - services by RBI
2. Entry 27A - services provided to acc holders under PMJDY

F. miscellaneous exemptions
1. Entry 11 - services by way of pure labour contracts of construction to a single
residential unit
2. Entry 46 - services by a veterinary clinic in relation to healthcare of animals or
birds
3. Entry 75 - services provided by operators of the common bio-medical waste
treatment facility.
4. Entry 79 - services by way of admission to a museum, national park, wildlife
sanctuary, tiger reserve, zoo etc.

Reimbursement of expenses
It refers to repayment of money spent by a person. In business, this usually happens when
a supplier incurs expenditure on behalf of the recipient who is supposed to incur the
expenditure.
2 types of expenses that may get reimbursed to the supplier under GST
1) Incidental expenses incurred by the supplier in the course of supply and forms a
part of the supply value. This could be in the form of commission, packing,
travelling etc. these expenses are incurred before or at the time of delivery
2) Expenses that the supplier incurs as a pure agent i.e. supplier has incurred on
behalf of the recipient but don't form a part of supply value. Eg: registration fees,
taxes to govt, transportation to 3rd party transported etc.(Pure agent refers to a
supplier who makes a supply to a recipient and incurs expenditure on some other
related supply on behalf of the recipient for which they claim a reimbursement.)
The reimbursement sought by the supplier is at the actual cost incurred, and no value is
added to the original value of the supply made by the supplier. The relationship between
the supplier and the recipient for the main supply made is that of a principal to principal
basis. On the other hand, the relationship between the supplier and the recipient for the
ancillary supply made is that of a pure agent..

What is the impact of GST on reimbursement of expenses? 

All reimbursements of expenses shall form a part of the value of supply, except when
incurred as a pure agent.
According to Section 15(2) clause (c) any goods or services provided by the supplier, for
which a consideration is charged from the recipient, shall be included in the transaction
value and chargeable to tax.
With regard to reimbursement of expenses incurred as a pure agent, Rule 33 of the CGST
valuation rules provides that any expenditure incurred as a pure agent will be excluded
from the value of supply, and hence, from the aggregate turnover as well. However the
following conditions are to be satisfied

● The supplier acts as a pure agent of the recipient when he makes a payment to a
third party after authorisation by such recipient.
● The payment that the pure agent made on behalf of the recipient is indicated
separately on the invoice issued by the pure agent to the recipient. 
● The supplies procured by the pure agent from the third party are in addition to the
supplier supplies’ services on his account.

If these conditions are not satisfied, then such expenditure incurred will be included in
the value of supply under GST.

Small supplies - composition scheme

In the case of small taxpayers the high rate of GST as well as huge unnecessary
procedural requirements, creates hassles which stops the registered person from
following the provisions diligently. In order to bring simplicity and to reduce the
compliance cost for the ‘Small Taxpayers’ a simplified scheme has been introduced under
section 10 of the CGST Act called Composition Levy or Composition Scheme.

Tax payable under composition scheme:

Sec 10(1) has been amended in the following manner with a view to remove any
interpretational ambiguity and stipulate that the composition taxpayers shall pay tax as a
percentage of their turnover instead of the tax payable on the invoice value of
transactions.

Conditions pertaining to Composition Scheme:

They can be classified broadly into the following:-
● Turnover limit
● Persons not eligible as per section 10(2)
● Conditions and restrictions as per rule 5 of the CGST Rules

I. TURNOVER LIMIT

Aggregate Turnover is determined using: a)All taxable supplies of goods and services
b) The exempted supplies c) Export of goods/ services d) Inter-state Supplies

In Relation to Aggregate turnover they are 3 important points:

1) (a) Any exempted supply of goods to be included.
(b) As regards exempt supply of services, Interest on loan or deposit is not included while
other services are included
2) Same PAN: For aggregate turnover the supplies shall be determined for all
units/branches of the registered person having the same PAN and the aggregate turnover
is computed on all India Basis.
3) Exclusions: te aggregate turnover does not include the following *Value of inward
supplies on which tax is payable under Reverse charge mechanism and *The amount of
GST

II. PERSONS NOT ELIGIBLE UNDER SEC 10(2)

● He is engaged in the supply of services (other than supplier of Food articles) of

value not exceeding 10% of turnover in state/UT in the preceding financial year or
Rs.5,00,000 , whichever is higher.
● He is engaged in making any supply of goods or services which are not leviable to
tax under CGST Act
● He does inter-state outward supplies of goods or services
● He supplies goods and services through an electronic commerce operator who is
required to collect tax at source under section 52.
● He is a manufacturer of such goods as may be notified by the government on the
recommendations of the council ( example ice cream and other edible ice, whether
or not containing cocoa, pan masala, Aerated water & Tobacco related products)
● He is a casual taxable person or non resident taxable person.
III. RULE 5
Conditions to be complied with by the person opting for composition levy. They are as
follows:
1) He is neither a casual taxable person nor a non-resident taxable person.
2) The goods purchased by him should not have been purchased in the course of
inter-state trade, imported goods, goods from his branch office situated outside the
state.
3) The goods held in stock by him have not been purchased from an unregistered
supplier and where purchased he pays the tax under reverse charge under section
9(4)
4) He was not engaged in the manufacture of goods as notified.
5) He shall mention the words composition taxable person not eligible to collect tax
on supplies at the top of the bill of supply issued by him; and
6) He shall mention the words “Composition Taxable Person” on every notice or
signboard displayed at a prominent place at his principal place of business and at
every additional place or place of business.