Skip to content

Taxation · Value of Supply

Inclusions in Value of Supply under Section 15(2) CGST

Updated 4 October 2026 · Fact-checked

Section 15(2) CGST lists items added to the price to find the value of supply: other-law taxes, amounts the supplier was liable to pay but the recipient incurred, incidental expenses, interest, late fee, penalty and certain subsidies. GST is never included. Discounts allowed under Section 15(3) are excluded from value.

Understand Inclusions in Value of Supply (Section 15(2))

Under Section 15(1), the value of supply is the transaction value, which is the price actually paid or payable when the supplier and recipient are not related and price is the sole consideration. But the invoice price often does not capture everything the recipient pays for the supply. Section 15(2) fixes this by listing amounts that must be included in the value, whether or not they appear in the price.

Think of it as a catch-all for costs linked to the supply. The idea is that the tax base should cover the full economic value that moves from recipient to supplier, and not be reduced by splitting the charges into separate line items.

The main inclusions are these:
- Any taxes, duties, cesses, fees and charges levied under any law other than the GST Acts and the GST (Compensation to States) Act, to the extent charged separately by the supplier. Examples are excise duty on petroleum products and State excise duty or VAT on alcohol for human consumption, which are outside GST, where the supplier charges them separately.
- Any amount that the supplier was liable to pay in relation to the supply but which has been incurred by the recipient and is not included in the price actually paid or payable.
- Incidental expenses and charges, including commission and packing, charged by the supplier to the recipient for anything done by the supplier in respect of the supply at the time of or before delivery of the goods or supply of the services.
- Interest, late fee or penalty for delayed payment of any consideration.
- Subsidies directly linked to the price, excluding subsidies given by the Central and State Governments.

Two points often trip students up. First, GST itself (CGST, SGST, UTGST, IGST and the compensation cess) is never part of the value. Second, the subsidy rule has an exception: a subsidy given by the Central or a State Government is not added, but a subsidy from any other source (for example a private body or a non-government agency) that is linked to the price is added.

The tax is then charged on this total, so each item you include increases GST payable.

Key rules to remember

Value of supply with inclusions
Value of supply = Price actually paid or payable (excluding GST) + Section 15(2) inclusions
GST, including compensation cess, is never part of value. If the invoice price already contains an item, do not add it twice. Discounts covered by Section 15(3) are excluded from value: those given before or at the time of supply, and those given after supply if agreed before or at the time of supply and linked to specific invoices, with the recipient reversing the related input tax credit.
Section 15(2)(a)
Taxes, duties, cesses, fees and charges under any law other than the GST Acts and the GST (Compensation to States) Act are included, to the extent charged separately by the supplier
Examples: excise duty on petroleum products, and State excise duty or VAT on alcohol for human consumption, where the supplier charges them separately. Taxes under the GST Acts and the compensation cess law are excluded.
Section 15(2)(b)
Any amount that the supplier was liable to pay in relation to the supply but which has been incurred by the recipient, and is not included in the price actually paid or payable, is included
Applies when the recipient bears a cost that was the supplier's liability for the supply, and the price does not cover it.
Section 15(2)(c)
Incidental expenses and charges (commission, packing, etc.) charged by the supplier to the recipient, for anything done by the supplier in respect of the supply at the time of or before delivery or supply, are included
The key conditions are that the supplier charges the recipient and that the thing is done at the time of or before delivery of goods or supply of services.
Section 15(2)(d)
Interest, late fee or penalty for delayed payment of consideration is included
Applies to charges for delayed payment by the recipient.
Section 15(2)(e)
Subsidies directly linked to the price are included, except subsidies given by Central and State Governments
Government subsidies are excluded from value. Non-government subsidies directly linked to price are included.

How to solve Inclusions in Value of Supply (Section 15(2)) questions

Use this method for any question that asks you to compute value of supply or to decide whether a specific item is included.

  1. 1Start with the price actually paid or payable for the supply, and check that it is the transaction value (parties unrelated, price the sole consideration).
  2. 2List every other amount charged or received in the facts: duties, packing, commission, freight, interest, late fee, subsidy and so on.
  3. 3Test each item against the Section 15(2) clauses: other-law taxes, supplier's liabilities incurred by the recipient, incidental expenses charged by the supplier, delayed-payment charges, subsidies.
  4. 4For taxes, check whether they are under GST law. If they are CGST, SGST, IGST or compensation cess, exclude them. Other-law taxes charged separately are included.
  5. 5For subsidies, check the source. Central or State Government subsidy is excluded. Other subsidy directly linked to price is included.
  6. 6Check if the item is already inside the price given, so you do not add it twice.
  7. 7Apply Section 15(3) after listing inclusions: discounts that qualify under it are excluded from value, if the question gives any.
  8. 8Total the amounts, state the value of supply, and then compute GST at the given rate if asked.

Quickest way: Include-or-exclude quick test

When to use it: Use this in MCQs and in short written parts where you must decide quickly whether an amount forms part of value.

  1. Ask first: is it GST or compensation cess? If yes, exclude.
  2. Ask: is it a tax, duty or fee under another law (such as State excise duty on alcohol) that the supplier charges separately? If yes, include.
  3. Ask: is it a supplier's liability that the recipient incurred and the price does not cover (clause b), or an incidental charge such as commission or packing charged by the supplier to the recipient at or before delivery (clause c)? If yes, include.
  4. Ask: is it interest, late fee or penalty for late payment? If yes, include.
  5. Ask: is it a subsidy? Government (Central or State), exclude. Others linked to price, include.
  6. In written answers, write the clause, state the rule in one line, then the conclusion with the amount. This earns step marks even if the final figure slips.

Common mistakes in Inclusions in Value of Supply (Section 15(2))

  • Adding CGST or IGST to the value before computing GST.

    Students see 'taxes' in Section 15(2)(a) and add every tax shown on the invoice.

    Fix: Clause (a) covers taxes under laws other than GST. GST and compensation cess are always excluded.

  • Including a Central or State Government subsidy in value.

    Students remember 'subsidy is included' and forget the exception.

    Fix: Always check who gives the subsidy. Government subsidies are not added. Only other subsidies directly linked to price are added.

  • Excluding interest or late fee for delayed payment because it is charged after the supply.

    Students think value is fixed at the time of supply.

    Fix: Clause (d) specifically includes interest, late fee or penalty for delayed payment of consideration.

  • Counting packing or commission twice.

    The figure is given in the price and again in the list of charges.

    Fix: Read whether the price is stated to include the item. Add only amounts not already in the price.

  • Treating a subsidy not linked to price as part of value.

    Students include any subsidy received by the supplier.

    Fix: Only a subsidy directly linked to the price of the supply is included. A general grant is not.

Worked examples

Example 1

X Ltd sells machinery to Y Ltd (unrelated) for a price of ₹5,00,000. In addition, X Ltd charges separately: a levy under another law (not a GST Act) of ₹20,000, packing charges of ₹8,000, CGST and SGST at 9% each, and interest of ₹4,000 for delayed payment by Y Ltd. Compute the value of supply.

Show the solution
  1. Price actually paid or payable: ₹5,00,000.
  2. The levy is imposed under a law other than the GST Acts and is charged separately by the supplier: include ₹20,000.
  3. Packing charges are incidental expenses charged by the supplier before delivery: include ₹8,000.
  4. Interest for delayed payment is covered by Section 15(2)(d): include ₹4,000.
  5. CGST and SGST are GST and are excluded from value.
  6. Value = ₹5,00,000 + ₹20,000 + ₹8,000 + ₹4,000 = ₹5,32,000.

Answer: Value of supply = ₹5,32,000. GST at 18% (9% + 9%) would be ₹95,760.

Example 2

A supplier sells a product to a customer for ₹80,000. A non-government trust gives the supplier a subsidy of ₹6,000 directly linked to the price of this product. The supplier also receives a Central Government subsidy of ₹10,000 on the same product. Compute the value of supply.

Show the solution
  1. Price paid or payable by the customer: ₹80,000.
  2. The trust subsidy is directly linked to price and is not from the Central or a State Government: include ₹6,000.
  3. The Central Government subsidy of ₹10,000 is excluded under Section 15(2)(e).
  4. Value = ₹80,000 + ₹6,000 = ₹86,000.

Answer: Value of supply = ₹86,000.

Exam tips

  • Practise the subsidy rule with source checks. Examiners often give a Government subsidy and a non-government subsidy together to test the exception.
  • In MCQs, look for the trap of GST or cess shown as a 'tax' in the list. Exclude it at once.
  • When a question gives several charges, tabulate them as included or excluded with the clause number. This earns step marks.
  • Remember that discounts follow Section 15(3), so read the facts for any discount given before or at the time of supply, or agreed in advance and linked to invoices.

Practice questions from Value of Supply

Inclusions in Value of Supply (Section 15(2)) in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Inclusions in Value of Supply (Section 15(2)): frequently asked questions

Is a subsidy included in value of supply under GST?

A subsidy directly linked to the price of the supply is included, but only if it is not given by the Central or a State Government. Government subsidies are excluded. A subsidy not linked to price is not added.

Are interest, late fee and penalty included in value of supply?

Yes, when charged for delayed payment of consideration for the supply. Section 15(2)(d) includes them in value. They increase the base on which GST is charged.

Are taxes included in value of supply?

Taxes, duties and fees under laws other than the GST Acts and the compensation cess law, such as excise duty on petroleum products or State excise duty on alcohol, are included to the extent the supplier charges them separately. GST and compensation cess are excluded from value.

What are incidental expenses under Section 15(2)?

They are incidental expenses and charges, such as commission and packing, that the supplier charges the recipient for anything done in respect of the supply at the time of or before delivery of the goods or supply of the services. They are added to the value of supply.