Valuation of supply under GST
GST will be charged on the ‘transaction value’. Transaction value is the price actually paid (or payable) for the supply of goods/services between unrelated parties (i.e., price is the sole consideration).
The value of supply under GST shall include:
*Any taxes, duties, cess, fees and charges levied under any act, except GST. GST Compensation Cess will be excluded if charged separately by the supplier.
*Any amount that the supplier is liable to pay which has been incurred by the recipient and is not included in the price.
*The value will include all incidental expenses in relation to sale such as packing, commission etc.
*Subsidies linked to supply, except Government subsidies will be included.
*Interest/late fee/penalty for delayed payment of consideration will be included.
Let us consider an example of ABC, a manufacturer, selling tools and hard wares like drills, polishers, spades etc. It sells a power drill to XYZ a wholesaler. The MRP is INR 5,500 but ABC sells it for INR 3,000.
