Indirect Tax Laws and Practice · Valuation under GST

Valuation on Retail Sale Price under Rule 31D

Updated 11 October 2026 · Fact-checked

Rule 31D of the CGST Rules deems the value of supply of specified goods (pan masala, tobacco and similar products) to be the declared retail sale price less the tax in it. You find the tax by multiplying the RSP by the tax rate and dividing by (100 + sum of applicable tax rates). Subtract that tax from the RSP.

Understand Valuation on Retail Sale Price: Rule 31D

Normally, value of supply is the transaction value under section 15 of the CGST Act. For some goods, the price actually charged may differ from the price printed on the pack. Rule 31D fixes this by using the printed price.

The rule applies only to goods listed in its Table. These are: pan masala (2106 90 20), unmanufactured tobacco and tobacco refuse other than tobacco leaves (2401), cigars, cheroots, cigarillos and cigarettes (2402), other manufactured tobacco, homogenised or reconstituted tobacco, tobacco extracts and essences other than biris (2403), and products containing tobacco or nicotine substitutes intended for inhalation without combustion (2404 11 00 and 2404 19 00). The rule was inserted with effect from 01.02.2026 by Notification No. 20/2025-CT dated 31.12.2025.

The rule starts with "notwithstanding anything contained in the provisions of this Chapter". So for listed goods it overrides the normal valuation rules, including section 15 transaction value and the other valuation rules of the Chapter. You do not look at the invoice price.

The retail sale price is the maximum price declared on the package at which the goods in packaged form may be sold to the ultimate consumer. It includes all taxes, duties, surcharge or cess. So the RSP is a tax-inclusive figure, and the rule strips the tax out to reach the value.

The explanation also settles awkward cases. If more than one RSP is declared on a package, the highest applies. If the RSP is increased at any stage before, during or after the supply, the increased price applies. If different packages carry different RSPs for different areas, each RSP applies to goods meant for its area.

Key rules to remember

Deemed value under Rule 31D: Value of supply = Retail sale price − Tax amount; Applies only to the goods listed in the Table of the rule.
Tax amount: Tax amount = (RSP × tax rate in %) ÷ (100 + sum of applicable tax rates); Applicable tax means IGST, or CGST and SGST/UTGST as the case may be. For intra-State supply, add CGST and SGST rates in the denominator and the numerator's total rate.
Multiple RSPs on a package: RSP used = maximum of the declared RSPs; If RSP is later increased, the altered higher RSP is used.
Area-wise RSP: Each declared RSP applies to goods intended for sale in its own area; Used where different packages carry different RSPs for different areas.

How to solve Valuation on Retail Sale Price: Rule 31D questions

Use this method for any question on valuing goods from the retail sale price.

1Check the goods against the Table of Rule 31D (pan masala, tobacco and listed tobacco or nicotine products). If they are not listed, use the normal valuation rules.
2Identify the RSP. If several RSPs are on the package, take the maximum. If the RSP was increased at any stage, take the increased price. If RSPs differ by area, use the one for the area of sale.
3Note that the RSP includes all taxes, duties, surcharge and cess.
4Find the applicable tax rate: IGST for inter-State supply, or CGST plus SGST/UTGST for intra-State supply.
5Compute tax = RSP × total tax rate ÷ (100 + total tax rate).
6Compute value = RSP − tax. Ignore the actual invoice price.
7If asked, compute the GST payable on the value, which equals the tax amount found in step 5, and state it with a conclusion.

Quickest way: Back-calculation from the RSP

When to use it: Use it when a question gives the RSP and a single combined GST rate and asks for value or tax.

Let r be the total GST rate in %. Value = RSP × 100 ÷ (100 + r).
Tax = RSP − Value.
Check that Value + Tax = RSP.
Write the rule name and the maximum or altered RSP point in one line to earn the method marks.

Common mistakes in Valuation on Retail Sale Price: Rule 31D

Valuing the goods on the invoice or transaction price
Section 15 transaction value is the usual rule, so students apply it by habit.
Fix: For listed goods, Rule 31D applies notwithstanding the rest of the Chapter. The RSP, not the invoice price, drives value.
Calculating tax as RSP × rate ÷ 100
Students forget that the RSP already includes tax.
Fix: Divide by (100 + rate). The RSP is tax-inclusive.
Using the lowest or first RSP when a package shows several
Students pick the first figure they see.
Fix: The rule deems the maximum declared RSP to be the RSP.
Ignoring a later increase in the RSP
The question states the original price first.
Fix: An increase at any stage before, during or after supply makes the altered RSP the retail sale price.
Applying Rule 31D to goods not in the Table
Students assume the rule covers all packaged goods.
Fix: Match the description and heading to the Table. Biris are outside entry 2403, and tobacco leaves are outside entry 2401.
Adding only the CGST rate in the denominator for an intra-State supply
Students treat CGST as the whole rate.
Fix: Use the sum of CGST and SGST/UTGST rates as the applicable taxes.

Worked examples

Example 1

A manufacturer supplies pan masala (2106 90 20) in packs. Each pack declares an RSP of ₹118 inclusive of all taxes. Assume the applicable combined GST rate is 18% (inter-State supply, IGST). Find the value of supply per pack and the tax included.

Show the solution

Pan masala is in the Table, so Rule 31D applies.
Tax = 118 × 18 ÷ (100 + 18) = 118 × 18 ÷ 118 = ₹18.
Value = 118 − 18 = ₹100.

Answer: Value of supply per pack is ₹100 and the tax included is ₹18.

Example 2

A pack of cigarettes (2402) shows two RSPs: ₹140 and ₹152.50, and the invoice price charged to the retailer is ₹100. Assume the combined applicable tax rate is 22% for this question (illustrative). Find the value of supply per pack.

Show the solution

Cigarettes are in the Table, so Rule 31D applies and the invoice price of ₹100 is ignored.
With more than one RSP on the package, the maximum, ₹152.50, is the RSP.
Tax = 152.50 × 22 ÷ 122 = 3355 ÷ 122 = ₹27.50.
Value = 152.50 − 27.50 = ₹125.

Answer: Value of supply per pack is ₹125, with tax of ₹27.50 included in the RSP of ₹152.50.

Exam tips

First test whether the goods are in the Table. Case scenarios often include one listed and one unlisted item.
Take the tax rate from the question. Do not assume a rate unless stated, and show the formula with the denominator (100 + rate).
Watch for traps: several RSPs, a raised RSP, or area-wise RSPs. Each has its own rule.
In MCQs, remember the value is lower than the RSP, and the tax part equals RSP × rate ÷ (100 + rate).
Write the rule's notwithstanding effect in one line when the question mentions a different invoice price.

Practice questions from Valuation under GST

Valuation on Retail Sale Price: Rule 31D: frequently asked questions

Which goods does Rule 31D cover?

It covers the goods in its Table: pan masala, unmanufactured tobacco and tobacco refuse other than tobacco leaves, cigars, cheroots, cigarillos and cigarettes, other manufactured tobacco products other than biris, and tobacco or nicotine products for inhalation without combustion. Goods outside the Table follow the normal valuation rules.

Does the actual invoice price matter under Rule 31D?

No. For listed goods, the value is deemed to be the declared RSP less the tax. The rule operates notwithstanding the other provisions of the Chapter.

What if different RSPs are printed on a package?

The maximum of the declared RSPs is deemed to be the RSP. If the RSP is raised at any stage before, during or after the supply, the raised price is used.

How do I find the tax included in the RSP?

Multiply the RSP by the applicable tax rate in percent and divide by 100 plus the sum of the applicable tax rates. Subtract this tax from the RSP to get the value.