Value of Supply Under GST

Any taxes, duties, cesses, or fees (other than GST) charged separately by the supplier, such as excise duties, custom duties, or cesses, must be included in the value of supply.

Example:
If a supplier charges ₹500 for goods and adds a separate tax of ₹50 (say, a cess), the value of supply will be ₹550.

Any additional charges such as packaging, handling, transportation, or delivery charges, that are incurred by the supplier for providing the goods or services, should be included in the transaction value.

Example:
If the price of a product is ₹2,000 and the delivery charge is ₹200, then the value of supply will be ₹2,200.

Discounts provided before or at the time of supply are not included in the value of supply, provided the discount is genuine and not subject to any conditions.

• Before Supply: If a supplier offers a discount in advance (such as a seasonal discount or a trade discount), it will be deducted from the transaction value.

• At the Time of Supply: If a discount is given after the invoice is issued, it can be subtracted from the value if it meets the conditions.

Example:
If the price is ₹5,000 and a discount of ₹500 is provided before the transaction, the value of supply will be ₹4,500.

If the payment for the goods or services is not made in money but in kind (goods or services), the value of supply will be determined based on the market value of the goods or services provided in exchange.

Example:
If a business gives goods worth ₹2,000 in exchange for services, the value of supply would be ₹2,000 (market value of the goods).

If a supplier charges interest, late fees, or penalties for delayed payments, these charges must also be included in the value of supply.

Example:
If a supplier sells a product for ₹10,000 and charges ₹500 as late payment interest, the value of supply will be ₹10,500.

Any charges for packaging, including disposable packaging and reusable packaging, must be added to the value of supply if the charges are separate.

Example:
If a product is sold for ₹2,000, and packaging charges are ₹50, the value of supply will be ₹2,050.

Any other charges that are paid by the recipient to the supplier for making the supply, such as commission or royalty, must be added to the value of supply.

Example:
If a product is priced at ₹1,000 and a commission of ₹100 is paid, the value of supply will be ₹1,100.

Any reimbursement of expenses incurred by the supplier on behalf of the customer, such as payment of third-party costs, should not be considered part of the supply value if the supplier acts as an agent and doesn't profit from the expense.

Example:
If a company reimburses ₹500 for postage charges, the ₹500 is not part of the value of supply as it is a reimbursement.

• Any amount paid by the supplier to a third party in the course of providing the supply, where the supplier acts only as an agent of the customer, and the amount is separately identifiable, will not be included in the value of supply.
  
  Example:
  If a supplier charges ₹10,000 for a product but arranges for a third-party service (e.g., shipping) for ₹1,000, the supplier can exclude the ₹1,000 from the value of supply if the conditions are met.

• Discounts provided by the supplier before or at the time of supply are excluded from the value of supply, provided they are genuine and disclosed in the invoice.
  
  

• Discounts provided after the time of supply (i.e., post-supply discounts) must be adjusted, and the value of supply will be recalculated accordingly.
  
  Example:
  If a product is priced at ₹5,000, and the supplier offers a trade discount of ₹500 before the sale, the value of supply will be ₹4,500.

• If goods are sent on approval or “sale or return” basis (i.e., the buyer has the option to approve or return the goods), the value of supply is determined when the buyer accepts the goods.

• Example:
  If goods are sent for approval worth ₹10,000, but the buyer has 30 days to return them, the value of supply is only recognized when the buyer accepts the goods, not before

• Subsidies provided by the government or any other organization to the supplier, provided they are not linked to the price of the goods or services, are excluded from the value of supply.

• Example:
  If the government provides a subsidy of ₹1,000 for the purchase of a product worth ₹10,000, the value of supply remains ₹10,000, not ₹9,000.

• If goods are sold in a liquidation process, such as in the case of a business liquidation or company closure, the value of supply is determined differently, and the goods may be exempt from GST in some cases, depending on specific conditions. 

In case the supply occurs between related parties (e.g., between a parent company and its subsidiary), the transaction value should be determined based on the market value if the relationship affects the price.

Example:
If a parent company sells goods to a subsidiary for ₹10,000 but the market price for those goods is ₹15,000, the value of supply will be ₹15,000.

In cases of barter or exchange transactions, where goods or services are exchanged for other goods or services instead of money, the value of supply will be determined based on the market value of the goods or services exchanged.

Example:
If you exchange a product worth ₹2,000 with another product worth ₹2,000, the value of supply would be ₹2,000.

For goods sold on approval (where the buyer has the option to approve or reject the goods), the value of the supply will be the actual price paid when the buyer accepts the goods, or the market value at the time of supply