Taxation · Value of Supply

GST Valuation Rules 27 to 35 (Including Rule 30, 31 and 31A)

Updated 5 October 2026 · Fact-checked

GST valuation rules 27 to 35 tell you how to value a supply when the price in the invoice is not enough. Start with the transaction value under section 15(1). If that fails, apply the rule for the situation: non-money consideration, related persons, agents, cost-based, residual, or specific supplies like forex, air tickets and used goods.

Understand Valuation Rules 27 to 35 and Rule 30-31A

Section 15(1) of the CGST Act says the value of a supply is the transaction value: the price actually paid or payable, when the supplier and recipient are not related and price is the sole consideration. Many real deals do not fit this. The consideration may be goods or services instead of money. The parties may be related. The supply may pass through an agent. Section 15(4) says that in such cases the value is found as prescribed. The prescription is Rules 27 to 35 of the CGST Rules, 2017.

Think of Rules 27 to 31 as a ladder, but each of Rules 27, 28 and 29 has its own first steps:

Rule 27 (consideration not wholly in money): open market value, then money consideration plus the money equivalent of the non-money part, then value of a supply of like kind and quality.
Rule 28 (related or distinct persons): open market value, then value of like kind and quality. Two provisos matter. The first proviso is an optional alternative to that open market value and like kind chain, not a step you reach after those steps fail. It says that where the goods are intended for further supply as such by the recipient, the supplier may opt for 90% of the price the recipient charges its unrelated customer for like goods. In practice this works where the recipient is not eligible for full input tax credit. The second proviso says that if the recipient is eligible for full input tax credit, the value declared in the invoice is deemed to be the open market value.
Rule 29 (goods supplied through an agent): open market value of the goods, or, at the supplier's option, 90% of the price the agent charges an unrelated customer for like goods. The 90% option is available only where the goods are intended for further supply by the agent. If the option does not apply and open market value is not available, you drop to Rule 30.

If the first steps of the rule fail, you drop to Rule 30 (cost plus 10%), and then to Rule 31 (best judgement, the residual method). The order matters. You may not jump to Rule 31 if Rule 30 works. The one exception is services: the supplier may choose Rule 31 and skip Rule 30.

Rules 31A and 32 are different. They give fixed, deemed methods for special supplies. Rule 31A values lottery, betting, gambling and horse racing by deemed amounts. For lottery, the deemed value is a fraction of the face value of the ticket or the price notified by the organising State, whichever is higher. For betting, gambling and horse racing in a race club, the deemed value is based on the face value of the bet or the amount paid into the totalisator. Casinos are not covered by Rule 31A. In the exam, follow the fractions and figures given in the question. Rule 32 has several sub-rules, and you must know which supply sits where:

Rule 32(2): foreign currency and money changing.
Rule 32(3): air ticket booking by a travel agent.
Rule 32(4): life insurance business.
Rule 32(5): second-hand (used) goods.
Rule 32(6): vouchers, tokens and coupons.

Here you do not climb the ladder. You pick the rule that matches the supply and apply its formula.

Rule 33 deals with the pure agent. Money you spend on behalf of the client and recover at actual cost is not your supply, so it is left out of value if the three conditions in the rule are met: you make the payment to the third party as pure agent of the recipient, the payment is separately indicated in the invoice, and the supplies procured are in addition to those you supply on your own account. Rule 34 fixes the exchange rate for foreign currency invoices: the rate is the applicable reference rate for the currency determined by the RBI on the date of the time of supply of the goods or services (section 12 or 13). Rule 32(2) also uses the RBI reference rate, but for valuing forex supplies. Rule 35 gives the formula to separate tax from a tax-inclusive price.

The skill the exam tests is matching the facts to the correct rule, then following the order inside that rule without skipping steps.

Key rules to remember

Rule 27: consideration not wholly in money: Value = (a) open market value of the supply; if not available, (b) money consideration + money equivalent of non-money consideration (if known at the time of supply); if not available, (c) value of supply of like kind and quality; if not available, (d) Rule 30, then Rule 31; Follow the order strictly. Use it for barter, exchange and part-cash deals.
Rule 28: distinct or related persons (not through an agent): Value = (a) open market value; if not available, (b) value of like kind and quality; if not available, (c) Rule 30, then Rule 31. First proviso (an optional alternative to (a) and (b), not a later step): if goods are intended for further supply as such by the recipient, the supplier may opt for 90% of the price the recipient charges its unrelated customer for like goods. Second proviso: if the recipient is eligible for full input tax credit, the value declared in the invoice is deemed to be the open market value; Check the second proviso (full ITC) before anything else. The 90% option in the first proviso is the supplier's choice instead of the open market value chain. It works only for goods meant for further supply as such, and in practice where the recipient is not eligible for full ITC.
Rule 29: goods supplied through an agent: Value = open market value of the goods; or, at the supplier's option, 90% of the price the agent charges an unrelated customer for like goods, but only where the goods are intended for further supply by the agent; failing which, Rule 30, then Rule 31; Applies to supply of goods between principal and agent. The 90% option is not available if the goods are not intended for further supply by the agent.
Rule 30: cost method: Value = 110% of cost of production or manufacture, or cost of acquisition of the goods, or cost of provision of the services; Used only when the earlier rules in the chain fail.
Rule 31: residual method: Value = amount determined using reasonable means consistent with the principles of section 15 and the rules; For services, the supplier may opt for Rule 31 and disregard Rule 30.
Rule 31A: lottery, betting, gambling, horse racing: Lottery: deemed value = a fraction of the face value of the ticket or the price notified by the organising State, whichever is higher. Betting, gambling and horse racing in a race club: deemed value based on the face value of the bet or the amount paid into the totalisator; Casinos are not covered by this rule. Use the fractions and figures given in the question.
Rule 32(2): foreign currency and money changing: Currency to or from INR: value = (buying or selling rate − RBI reference rate) × units of currency. If no RBI rate is available: 1% of gross INR amount. Neither currency INR: 1% of the lesser of the two INR amounts at the RBI reference rate. Instead of the RBI reference rate method, the supplier may opt for the slab method: 1% of gross amount up to ₹1,00,000 (minimum ₹250); ₹1,000 + 0.5% of amount above ₹1,00,000 up to ₹10,00,000; ₹5,500 + 0.1% of the amount above ₹10,00,000, subject to a maximum of ₹60,000; The RBI reference rate difference method is the default. The supplier may opt for the slab method instead. The 1% rules apply where no RBI rate is available or neither currency is INR. Know the slabs cold. The minimum of ₹250 belongs to the first slab and the maximum of ₹60,000 belongs to the third slab only.
Rule 32(3): air travel agent: Value = 5% of basic fare (domestic booking); 10% of basic fare (international booking); Basic fare is the part of the air fare on which the airline normally pays commission to the agent.
Rule 32(4): life insurance business: Value = (a) gross premium minus the amount allocated for investment or savings on behalf of the policy holder, if that amount is intimated to the policy holder at the time of supply; (b) single premium annuity policies: 10% of the single premium; (c) all other cases: 25% of the premium in the first year and 12.5% of the premium in subsequent years; Check clause (a) first. It applies only if the investment portion was intimated to the policy holder at the time of supply. If the question gives different percentages, use the ones given.
Rule 32(5): second-hand (used) goods: Value = selling price − purchase price. If negative, ignore (value is nil); Applies to a person dealing in second-hand goods who has not availed input tax credit on the purchase, where the goods are sold as such or after minor processing that does not change their nature. For goods repossessed from a defaulting unregistered borrower, purchase value is the original price reduced by 5 percentage points for every quarter or part of a quarter from purchase to disposal.
Rule 32(6): vouchers, tokens, coupons: Value of a token, voucher, coupon or stamp (other than a postage stamp) that is redeemable against a supply of goods or services = the money value of the goods or services redeemable against it; Postage stamps are excluded from this sub-rule.
Rule 33: pure agent: Pure agent expenses are excluded from value if: (i) the supplier makes the payment to the third party as pure agent of the recipient; (ii) the payment is separately indicated in the invoice issued by the supplier to the recipient; (iii) the supplies procured by the supplier as pure agent are in addition to the services the supplier supplies on own account; A pure agent has a contract to act as such, holds no title to the goods or services, does not use them for own interest, and recovers only the actual amount incurred.
Rule 34: exchange rate: Rate of exchange = applicable reference rate for the currency determined by the RBI on the date of the time of supply of the goods or services (goods: section 12; services: section 13); The invoice date does not decide the rate unless it is also the time of supply.
Rule 35: tax-inclusive value: Tax amount = (value inclusive of tax × rate of the tax in question %) ÷ (100 + sum of all applicable tax rates %); For intra-State supply, the numerator rate is that of the tax in question (CGST or SGST each), and the denominator is 100 plus the sum of both rates. For example at 18%: total tax = value × 18 ÷ 118, and each of CGST and SGST = value × 9 ÷ 118.

How to solve Valuation Rules 27 to 35 and Rule 30-31A questions

Use this sequence for any valuation question on Rules 27 to 35. The first two steps decide the rule. The rest earn the step marks.

1Read the facts and list what you are given: the nature of consideration, the relationship between parties, any agent, and any special supply such as forex, air ticket, life insurance, used goods, lottery or voucher.
2Check whether section 15(1) already works. If the price is the sole consideration and the parties are unrelated, the invoice price is the value and you do not need these rules. Say so in one line.
3Pick the matching rule: Rule 27 for non-money consideration, Rule 28 for related or distinct persons, Rule 29 for goods through an agent, Rule 31A or 32 for the special supplies, Rule 33 for pure agent costs.
4Where the rule has a chain, apply the steps in order: open market value, then like kind and quality (where the rule has that step), then Rule 30, then Rule 31. State why each earlier step is unavailable before you move down.
5Compute the value. Under Rule 30 take 110% of cost. Under Rule 32 use the exact slab or formula. Under Rule 33 exclude only the amounts meeting all conditions.
6Add any section 15(2) items that apply (for example, incidental expenses charged by the supplier) and deduct section 15(3) discounts if the conditions are met.
7Convert foreign currency using Rule 34 where needed. If the price is tax-inclusive, split it using Rule 35.
8Apply the GST rate if the question asks for tax. Write the final value and tax clearly.

Quickest way: Match the facts to the rule, then follow the chain

When to use it: Use this under time pressure, both for 1 or 2 mark MCQs and for the 70-mark written section.

Underline the trigger words: barter, exchange, related, distinct person, agent, pure agent, used goods, forex, air ticket, life insurance, lottery, voucher.
For MCQs, eliminate options that skip a step. If open market value is given, any option using cost plus 10% is wrong.
For Rule 32 MCQs, memorise three numbers: 5% and 10% for air agents, and the forex slabs. Used goods is always selling price minus purchase price, with a negative result ignored.
Check one condition that often decides the answer: for used goods, was ITC availed? For a pure agent, is the cost shown separately in the invoice? For a Rule 29 agent supply, are the goods intended for further supply by the agent?
In the written answer, use this format for step marks: Provision (name the rule), Facts (what is given), Working (the computation in a clean line-by-line table of figures), Conclusion (value of supply and tax).
Always write the rule number next to each step. Examiners award marks for the correct rule even if arithmetic slips.

Common mistakes in Valuation Rules 27 to 35 and Rule 30-31A

Jumping straight to Rule 30 (cost plus 10%) without testing open market value and like kind and quality first.
Rule 30 gives a neat number to compute, so it feels like the answer. Students forget it is a fallback.
Fix: Write the chain in your answer and state why each earlier step is unavailable. Use Rule 30 only if the question gives no open market value, no money equivalent and no like-kind price.
Treating all expenses reimbursed to a service provider as pure agent costs and excluding them from value.
The word reimbursement suggests a pass-through. Students ignore the conditions.
Fix: Test all conditions: payment as agent of the recipient, separate indication in the invoice, and supply in addition to own services. If any fails, the amount is included in value.
Applying the used goods margin rule when ITC was availed on the purchase.
Students recall the margin formula but forget the condition attached to it.
Fix: Check for ITC first. If ITC was availed, the margin method is not available and the normal rules apply. If the margin is negative, the value is nil.
Dividing tax-inclusive value by the rate instead of using the Rule 35 formula, for example computing 18% of the inclusive price.
Students apply the rate to the total, which overstates the tax.
Fix: Tax = inclusive value × rate ÷ (100 + rate). For 18%, tax is 18/118 of the inclusive value, and the taxable value is 100/118.
Mixing up the air travel agent percentages or applying them to the total ticket price.
The two percentages look alike, and the term basic fare is overlooked.
Fix: Remember 5% domestic, 10% international, on the basic fare only (the part on which commission is normally paid), not on taxes or the whole ticket price.
Ignoring the second proviso to Rule 28 and valuing a supply to a related recipient eligible for full ITC at open market value, when the invoice value is deemed to be the open market value.
Students remember that related party supplies need open market value and stop there.
Fix: Check whether the recipient is eligible for full ITC. If yes, the value declared in the invoice is deemed to be the open market value.
Using the 90% option under Rule 29 for goods sent to an agent without checking whether the agent will make a further supply.
Students remember the 90% figure but not the condition attached to it.
Fix: Allow the 90% option only where the goods are intended for further supply by the agent. Otherwise use open market value, and if that is not available, go to Rule 30 and then Rule 31.

Worked examples

Example 1

A manufacturer, Alpha Ltd, supplies 1,000 units of goods to its related distributor, Beta Ltd, at ₹900 per unit. These goods are meant for further supply as such. Beta Ltd sells identical goods to unrelated customers at ₹1,200 per unit. Beta Ltd is not eligible for full input tax credit. Alpha Ltd opts for the 90% method. Find the value of supply by Alpha Ltd to Beta Ltd under Rule 28.

Show the solution

Rule 28 applies because the supplier and the recipient are related persons and the price may not reflect the open market value.
Beta Ltd is not eligible for full ITC, so the second proviso (invoice value deemed to be the open market value) does not apply.
The goods are meant for further supply as such by the recipient, so the first proviso to Rule 28 is available. It is an optional alternative to the open market value and like kind and quality route, not a step you reach after those fail.
Alpha Ltd opts for the first proviso, so the value is 90% of the price charged by the recipient to its unrelated customers for like goods. You do not need an open market value for this.
Value per unit = 90% × ₹1,200 = ₹1,080.
Total value = 1,000 × ₹1,080 = ₹10,80,000.

Answer: The value of supply is ₹10,80,000, not the invoice price of ₹9,00,000.

Example 2

A consultant charges professional fees of ₹80,000 to a client. The bill also shows ₹5,000 for own travel and ₹10,000 for court fees paid to the court as a pure agent of the client. The court fee is shown separately in the invoice, is incurred under an agreement to act as pure agent, and is recovered at actual cost. GST on the consultancy is 18%. Find the value of supply and the GST.

Show the solution

Test Rule 33. The consultant paid a third party (the court) on behalf of the client, the payment is shown separately in the invoice, and it is in addition to the consultancy service supplied on own account.
The agreement, no title or own use, and recovery at actual cost are also met, so the consultant is a pure agent for the court fee.
The court fee of ₹10,000 is therefore excluded from the value of supply.
Travel cost of ₹5,000 is the consultant's own expense charged to the client. It is not a pure agent cost, so it is included under section 15(2).
Value of supply = ₹80,000 + ₹5,000 = ₹85,000.
GST at 18% = ₹85,000 × 18% = ₹15,300.

Answer: Value of supply is ₹85,000 and GST is ₹15,300. The ₹10,000 court fee is excluded.

Exam tips

Most questions are fact-pattern questions where the whole task is choosing the right rule. State the rule number first, then compute.
Memorise Rule 32 numbers exactly: 5% and 10% for air agents, the three forex slabs with their minimum ₹250 and maximum ₹60,000, and the 5 percentage points per quarter reduction for repossessed goods. Also know which sub-rule covers which supply: forex (2), air agent (3), life insurance (4), used goods (5), vouchers (6).
In MCQs, look for the hidden condition: ITC availed on used goods, separate indication of pure agent costs, full ITC eligibility of a related recipient, or further supply by the agent under Rule 29.
For Rule 31A, use the deemed fraction or figure given in the question. Do not rely on memory of rates or fractions.
Show the chain in written answers even when it is short. A line like open market value not available, hence Rule 30 earns marks that a bare number does not.

Practice questions from Value of Supply

Valuation Rules 27 to 35 and Rule 30-31A in other exams

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

CMA IntermediateValuation Rules and Methods

Valuation Rules 27 to 35 and Rule 30-31A: frequently asked questions

When do Rules 27 to 35 apply instead of section 15(1)?

Section 15(1) applies when the price is the sole consideration and the supplier and recipient are not related. When consideration is not wholly in money, the parties are related, or the supply passes through an agent, section 15(4) sends you to these rules. The special supplies in Rules 31A and 32 have their own fixed methods.

What is the order under Rule 27 when consideration is not in money?

First use the open market value of the supply. If that is not available, use the money consideration plus the money equivalent of the non-money part, if known at the time of supply. Then use the value of a supply of like kind and quality. As a last resort use Rule 30, then Rule 31.

Who is a pure agent under Rule 33?

A pure agent has a contract to act as pure agent of the recipient, holds no title to the goods or services procured, does not use them for own interest, and recovers only the actual amount incurred. The costs are excluded from value only if the payment is made as pure agent, is shown separately in the invoice, and is in addition to the supplier's own services.

How is the value of used goods determined under Rule 32?

Under Rule 32(5), for a person dealing in second-hand goods who has not availed ITC on the purchase, value is the selling price minus the purchase price. If the result is negative, it is ignored and the value is nil. This applies to goods sold as such or after minor processing that does not change their nature.