In the GST law , after getting the New GST Registration you have to must understand about Value of Supply under the GST so you can prepare your invoice properly and charge the GST from the customer even you have to mentioned the value of supply during the GST Return Filings. Under Section 15 of the GST Act 2017 determination of value of taxable supply is provided. One has to understand the value on which GST will be calculated. It provides that the value to taxable supply of goods/services or both shall be the transaction value, which is the price actually paid or payable for such supply if:

1. Supplier and the recipient of the supply are not related, and

1. The price is the sole consideration for the supply.

The value of supply will include the following:

1. Any taxes, cesses, duties, fees and charges levied under any law for the time being in force except GST, if charged separately by the supplier.

1. Expenses incurred on behalf of the supplier by the recipient.

1. Incidental expenses, such as, commission and packing, charged by the supplier to the recipient.

1. Interest or late fee or penalty for delayed payment of any consideration for any supply.

1. Subsidies directly linked to the price excluding subsidies provided by the Central Government and State Governments.

Important Definition For Determination Of Value Of Supply

• Open Market Value means the full value in money not including GST and cess, where supplier and recipient of supply are not related and the price is sole consideration, to obtain supply at same time when supply which is valued is made.

• Supply of Goods/Services or both of like kind and quality means any other supply of goods or services or both made under similar circumstances that, in respect of the characteristics, quality, quantity, functional components, materials, and reputation of the goods or services or both first mentioned, is the same as, or closely or substantially resembles, that supply of goods or services or both.

How Discount Will Be Treated In Value Of Supply?

• The Value of supply will not include the discount which is given:

• If the discount has been duly recorded in the invoice issued in respect of supply before or at the time of supply,

After supply has been effected if:

• Discount is established in terms of agreement entered into at or before the time of supply and is linked specifically to the invoices,

• Input tax credit is attributable to the discount on the basis of the document issued by the supplier has been reversed by recipient of supply.

Determination of Value of Supply

In case consideration for value of supply is not fully given in form of money than one can determine the value of supply as per following:

• Open market value of the supply.

• If open market value is not available total money value of supply then  the monetary consideration plus money value of non-monetary consideration.

• If it is not possible to determine the value then the values of supply of like kind and quality.

• Also if not possible to determine the value then cost plus 10% mark-up method will be used to determine the value.

• If the above options are not available then value will be determined as per the residual method i.e. by the best judgement assessment relying on reasonable means which is in consonance with the legal provisions and rules.

Value of Supply of Goods made or received through an agent

• Open Market value of goods or at the option of supplier, 90% of price charged for supply of goods of like kind and quality by the recipient to his unrelated customer.

• If not available then cost plus 10% mark-up method can be used to determine value.

• If not determined by above then value can be determined as per residual method i.e. by the best judgement assessment relying on reasonable means which is in consonance with the legal provisions and rules.

Value of Supply of services in relation to purchase or sale of foreign currency

One can calculate the value of supply of services in case of foreign currency by following methods:

1. Method one : When a currency is exchanged from or to Indian Rupees

• Value of services = Buying rate or selling rate – Reference rate of RBI) x Total units of currency.

• If the RBI reference rate for currency is not available then: Gross amount of Indian Rupees provided or received x 1%

• If both currencies exchanged is not in Indian Rupee then it will be  1% of the lesser of the two amounts the person changing the money would have received by converting any of the two currencies into Indian Rupee

2. Method two : as per the Gross amount of currency exchange (GCE)

Value of services will be calculated as per following:

If Up to Rs. 1,00,000/- GCE x 1%

1,00,001/- to 10,00,000/- Rs. 1000 + GCE x 0.5%

Exceeding Rs. 10,00,000/- Lower of Rs. 5000 + GCE x 0.1% or Rs.60,000

Conditions:

• Option is available for every financial year.

• Option once exercised can’t be withdrawn during the remaining part of the FY.

Booking of Tickets for Air Travel by an Air Travel Agent

1. Domestic booking

Value of Service = Basic Fare x 5%

2. International booking

Value of Service = Basic Fare x 10%

Value of Supply Of Services in relation to Life Insurance Business

1. In case policy include investment / saving component

Value of Service = (Gross premium charged – Amount allocated for investment or savings) following conditions are to be fulfilled:

• Such amount of investment/ saving is intimated to the policy holder at the time of supply of service

2. In case of single premium annuity policies (other than 1 above)

Value of Service = Single premium charged x 10%

3. Where policy has benefit of risk coverage only

Value of Service = Entire premium charged

4. In all other cases

• For the first year of policy

Value of Service = Premium Charges x 25%

• For subsequent years

Value of Service = Premium Charges x 12.5% 

Value of supply of Second hand goods

Value of supply = Selling price – Purchase price

If the value of supply is in negative then value should be ignored. Following conditions have to fulfill:

• Business of person should be buying and selling of second hand goods.

• No input tax credit has been availed on purchase of such goods.

Value of a token, or a voucher, or a coupon, or a stamp (other than postage stamp) which is redeemable against a supply of goods or services or both

Value of supply = Money value of the goods or services or both redeemable against such token, voucher, coupon, or stamp.

Rate of exchange of currency, other than Indian rupees, for determination of value

The rate of exchange will be applicable as the reference rate for that currency which is determined by RBI on the date when point of taxation occurs of the supply.