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CMA Final · Indirect Tax Laws and Practice

Valuation under GST for CMA Final Paper 19

Valuation under GST decides the amount on which tax is charged. The base rule is transaction value under Section 15 CGST Act: the price actually paid or payable, when parties are unrelated and price is the sole consideration. Add the listed inclusions, remove allowed discounts, and use the valuation rules only when this base rule fails.

What this chapter covers

This chapter answers one question: on what amount do you charge GST? Section 15 of the CGST Act gives the main rule. The value is the transaction value, meaning the price actually paid or payable, where the supplier and recipient are not related and the price is the sole consideration. Section 15(2) lists what must be added. Section 15(3) says which discounts can be left out. Section 15(4) sends you to the Rules when the transaction value cannot be determined. Section 15(5) lets notified supplies be valued in the prescribed manner even where a price exists.

The Rules work in two ways. Rule 29 (principal and agent) and, after it, Rules 30 and 31 are fallbacks under Section 15(4), used when the value cannot be fixed under Section 15(1). Rules 31D and 33 apply notwithstanding anything in the Chapter, so they override the normal valuation even where a transaction value exists. Rule 33 covers the pure agent, whose disbursements stay out of the value. Rule 31D is a mandatory special rule, of the kind Section 15(5) allows, for specified goods such as pan masala and tobacco products, where the value is the retail sale price less tax. It is a recent addition: it was inserted with effect from 1 February 2026 by Notification No. 20/2025-CT. The chapter also touches the transitional FORM GST TRAN-1 revision in Rule 120A.

This chapter feeds the rest of Paper 19. Tax liability, input tax credit, time and place of supply, and returns all start from the value you compute here. A wrong value gives a wrong tax figure and a wrong credit position. Practise valuation together with time of supply and place of supply, because a numerical question often tests all three at once.

Valuation concepts can be tested in both parts of the paper. In Section A they can appear as quick MCQs on what is included in value, what discount is allowed, and who is a related person. In the written part they can appear as a working: you build the taxable value line by line and then compute tax. The rules are short and exact, so careful preparation is rewarded and loose recall costs marks. It also supports almost every other numerical question in the paper, so time spent here pays back across chapters.

Valuation under GST: topics in the order to study them

  1. 1Value of Supply under Section 15 CGST ActThis is the base rule. Every other topic is an exception or a fallback to it.
  2. 2Time, Place and Value InterlinkingLearn it next to see how value, time of supply and place of supply combine in one tax computation.
  3. 3Fallback valuation rulesThese rules apply when Section 15(1) cannot be used, so study them right after the Section 15 base rule. Include Rule 29 on supplies between principal and agent.
  4. 4Pure agent (Rule 33)Rule 33 on pure agent is a frequent exam point. It decides which disbursements stay out of value.
  5. 5Valuation on Retail Sale Price: Rule 31DThis is a special rule for specified goods that overrides the normal chapter, so learn it once the normal rules are clear.
  6. 6Revision of Declaration in FORM GST TRAN-1: Rule 120AIt is a short procedural point, best read last as a quick add-on.

How to prepare Valuation under GST

Work from the base rule to the exceptions. Keep the Section 15 text in your own words and practise small numerical builds every day.

  1. Read Section 15(1) to (3) and write the inclusions and discount conditions as a short list in your own words.
  2. Learn the related person definition: officers or directors of each other's businesses, legally recognised partners, employer and employee, 25% or more of voting stock or shares, control, common control, and same family. Add sole agent, sole distributor or sole concessionaire.
  3. Practise a standard build-up: start with the price, add Section 15(2) items, subtract eligible discount, then apply the tax rate.
  4. Study the discount conditions. A discount recorded in the invoice at or before supply is excluded. A post-supply discount needs an agreement at or before supply, a link to invoices, and reversal of the attributable input tax credit by the recipient.
  5. Learn the Rule 33 pure agent conditions and its three tests. Solve two or three disbursement cases and decide which items stay out of value.
  6. Do Rule 31D with one worked example: tax amount = retail sale price × tax rate ÷ (100 + sum of applicable tax rates). Value is the retail sale price minus that tax.
  7. Finish with mixed MCQs and one written case where you state the value, give the reason, and show the tax computation.

Common mistakes in Valuation under GST

  • Adding GST itself to the transaction value before computing GST.

    Fix: Section 15(2)(a) adds only taxes charged under other laws. It excludes taxes under the CGST Act, SGST Act, UTGST Act and the Goods and Services Tax (Compensation to States) Act. IGST is excluded in effect because it is levied under the IGST Act, not under another law.

  • Allowing every discount as a deduction.

    Fix: Test each discount against Section 15(3). A post-supply discount needs an agreement, invoice linkage and ITC reversal by the recipient.

  • Excluding all reimbursed expenses as pure agent costs.

    Fix: Check all three Rule 33 conditions. Payment must be on the recipient's authorisation, shown separately in the invoice, and be in addition to the supplier's own services.

  • Jumping to the valuation rules when the price is acceptable.

    Fix: First test Section 15(1). Use the Rules only when the transaction value cannot be determined or the supply is specifically covered.

  • Wrong tax computation under Rule 31D.

    Fix: Remove the tax using the formula: tax = RSP × rate ÷ (100 + sum of applicable rates). Then value = RSP minus tax.

  • Treating the agent rule as a fixed 90% rule.

    Fix: Rule 29 gives the open market value, or at the supplier's option 90% of the agent's onward price for like goods, where the goods are intended for further supply. If that fails, apply Rule 30 and then Rule 31.

Last-day revision: Valuation under GST

  • Value of supply is the transaction value: the price paid or payable, when parties are unrelated and price is the sole consideration.
  • Section 15(2) adds other-law taxes charged separately, supplier's liabilities borne by the recipient, incidental expenses, interest or late fee, and price-linked subsidies other than Government subsidies.
  • Subsidies from the Central or State Governments are not added to the value.
  • Discount recorded in the invoice at or before supply is excluded.
  • A post-supply discount needs an agreement, a link to invoices, and reversal of ITC by the recipient.
  • Section 15(4) sends you to the Rules when value cannot be fixed under Section 15(1).
  • Related persons include those holding 25% or more of the voting stock or shares of both.
  • Rule 29 sets the value for supplies of goods between principal and agent. It is the open market value, or, at the supplier's option, 90% of the price the agent charges his customer (not a related person) for goods of like kind and quality. The 90% option applies only where the goods are intended for further supply by the agent.
  • Pure agent expenses are excluded only if all three Rule 33 conditions are met, including separate indication in the invoice.
  • Rule 31D value = retail sale price less tax, for goods such as pan masala and tobacco products.
  • Under Rule 31D, if a package shows more than one retail sale price, the maximum applies.
  • Rule 120A allows a registered person to revise FORM GST TRAN-1 once, within the time limit in the rules or any extended period.

Valuation under GST practice questions

Valuation under GST in other exams

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

Valuation under GST: frequently asked questions

What is transaction value under Section 15 of the CGST Act?

It is the price actually paid or payable for the supply. It applies only when the supplier and recipient are not related and the price is the sole consideration. If either condition fails, the value is found under the prescribed rules.

When can a pure agent's expenses be left out of value?

Under Rule 33, they are excluded only if three conditions are met. The supplier pays the third party on the recipient's authorisation, shows the payment separately in the invoice, and the procured supplies are in addition to the supplier's own services. The agent must also meet the definition of pure agent.

How is value found under Rule 31D?

For specified goods such as pan masala and tobacco products, the value is the retail sale price declared on the goods, less the tax. The tax is found as RSP × tax rate ÷ (100 + sum of applicable tax rates). Rule 31D was inserted with effect from 1 February 2026 by Notification No. 20/2025-CT.

Should I memorise the rule numbers for the exam?

Yes, learn the main ones: Rule 29 for principal and agent, Rule 31D for retail sale price, Rule 33 for pure agent, and Rule 120A for TRAN-1 revision. Rule numbers help you give a clear, supported answer in the written part.