Valuation of Supply under GST
FAQs on GST Valuation
The valuation of supply under GST determines the taxable value on which GST is calculated. This section covers the key components and rules for FY 2025-26.
Transaction Value
GST is primarily calculated on the transaction value, which is the price actually paid or payable for the supply of goods or services.
Must be between unrelated parties where price is the sole consideration.
Includes any taxes, duties, and fees except GST itself.
Excludes GST Compensation Cess if charged separately.
Inclusions in Valuation
Certain elements must be included in the valuation of supply under GST.
Any amount the supplier is liable to pay but incurred by the recipient.
Incidental expenses such as packing and commission.
Subsidies linked to supply, excluding government subsidies.
Discounts
Discounts affect the transaction value and must be treated according to specific rules.
Discounts before or at the time of supply are deductible from transaction value.
Post-supply discounts are deductible only if conditions are met.
Must be established in terms of an agreement entered into before the supply.
Special Cases
Certain transactions require special consideration under GST valuation rules.
For exports, invoices in foreign currency must use RBI exchange rates.
Reverse charge on imports requires conversion using RBI rates.
Transactions not in INR must be converted using prescribed exchange rates.
Example Calculation
Illustrative example of GST valuation for a better understanding.
A manufacturer sells a product for ₹3,000 with CGST and SGST at 9% each.
The total GST amount is ₹540 (₹270 CGST + ₹270 SGST).
Final invoice value becomes ₹3,540.
What is the transaction value under GST?
The transaction value is the price actually paid or payable for the supply of goods or services, provided the supplier and recipient are not related and the price is the sole consideration.
Are discounts included in the GST valuation?
Discounts given before or at the time of supply are excluded from the transaction value. Post-supply discounts are excluded only if specific conditions are met.
How are foreign currency transactions valued under GST?
For transactions in foreign currency, the value is converted using the RBI exchange rate applicable on the date of supply. This applies to both exports and imports.
What incidental expenses are included in GST valuation?
Incidental expenses such as packing, commission, and other charges related to the sale are included in the GST valuation.
How are subsidies treated in GST valuation?
Subsidies directly linked to the supply, except government subsidies, are included in the GST valuation.
Is GST charged on the MRP or the transaction value?
GST is charged on the transaction value, which is the actual price paid or payable, not on the Maximum Retail Price (MRP).
What happens if the supplier and recipient are related parties?
If the supplier and recipient are related, the transaction value may not be accepted, and the value will be determined as per GST Valuation Rules.
How is GST calculated on delayed payments?
Interest, late fee, or penalty for delayed payment of consideration is included in the value of supply and subject to GST.
Are government subsidies included in GST valuation?
No, government subsidies are not included in the GST valuation of supply.
What is the impact of reverse charge on GST valuation?
Under reverse charge, the recipient is liable to pay GST, and the value of supply is determined using the RBI exchange rate if the transaction is in foreign currency.