Indirect Tax Laws and Practice · Valuation under GST

GST Valuation Rules 31 to 35 and Pure Agent

Updated 11 October 2026 · Fact-checked

These rules fix the value of supply for special services and goods where the normal transaction value is hard to use. They cover lottery, betting, casino, money changing, air ticket booking, life insurance, used goods and vouchers. Under rule 33, a pure agent's disbursements are excluded if three conditions are met.

Understand Valuation Rules 31 to 35 and Pure Agent

Section 15 of the CGST Act says tax is charged on the transaction value. For some supplies this is hard to find. A money changer earns only a spread. An air agent earns a commission. A used-goods dealer sells goods bought earlier. So the Rules give deemed values for these cases.

Most of these rules work at the option of the supplier (rule 32). Rule 32 opens with that wording. The rules on lottery, betting and casino claims (rules 31A and 31C) are not optional. They say 'shall be'.

Rule 33 is different. It is not a deemed value. It removes costs you paid as a pure agent on behalf of the recipient. These are disbursements, not part of your supply. All three conditions in rule 33 must be met, and the pure agent test in the Explanation must also be met. If any fails, the amount stays in the value and attracts GST.

The simple idea is this. If you spend the customer's money on the customer's behalf and recover exactly that, it is a pass-through. If you buy something and use it to deliver your own service, it is your cost and part of your value.

Key rules to remember

Lottery (rule 31A(2)): Value = 100/140 × face value of ticket or the price notified by the Organising State, whichever is higher; The 140 figure applies from 22.09.2025 as substituted. Earlier text had 100/112 and 100/128, now replaced.
Betting, gambling, horse racing (rule 31A(3)): Value = 100% of the face value of the bet or the amount paid into the totalisator; This is the chance to win in betting, gambling or horse racing in a race club.
Casino (rule 31C): Value = total amount paid or payable by the player for tokens, chips, coins or tickets, or for participating in an event where none is needed; Amounts refunded on return of tokens are not deductible. Winnings replayed without withdrawal are not counted as fresh payment.
Money changing, rule 32(2)(a): Value = (buying or selling rate − RBI reference rate) × total units of currency; If no RBI reference rate exists, 1% of gross rupees given or received. If neither currency is rupees, 1% of the lesser of the two rupee equivalents at the reference rate.
Money changing, optional slab, rule 32(2)(b): Up to ₹1,00,000: 1% of gross amount, minimum ₹250. Above ₹1,00,000 up to ₹10,00,000: ₹1,000 + 0.5% of gross amount. Above ₹10,00,000: ₹5,500 + 0.1% of gross amount, maximum ₹60,000; Option under clause (a) is chosen for a financial year and cannot be withdrawn during it.
Air travel agent, rule 32(3): Value = 5% of basic fare (domestic) or 10% of basic fare (international); Basic fare is the part of the air fare on which the airline normally pays commission.
Life insurance, rule 32(4): (a) Gross premium − amount allocated for investment or savings, if intimated to the policy holder at supply. (b) Single premium annuity not under (a): 10% of single premium. (c) Other cases: 25% of premium in the first year and 12.5% in later years; The sub-rule does not apply where the whole premium is only for risk cover.
Used goods, rule 32(5): Value = selling price − purchase price; if negative, ignore it; Only where no input tax credit was taken on the purchase and goods are sold as such or after minor processing that does not change their nature.
Repossessed goods proviso: Deemed purchase price = borrower's purchase price − 5 percentage points for every quarter or part thereof, from purchase to disposal; Applies to goods repossessed from an unregistered defaulting borrower for recovering a loan or debt.
Vouchers, rule 32(6): Value = money value of goods or services redeemable against the token, voucher, coupon or stamp; Postage stamps are excluded.
Distinct persons, rule 32(7): Value of notified services between distinct persons = NIL, where ITC is available; Applies to a class of service providers notified by the Government.
Pure agent, rule 33: Value of supply excludes pure agent costs if: (i) payment made on recipient's authorisation, (ii) separately shown in the invoice, (iii) supplies are additional to own services; Also test the Explanation: agreement as pure agent, no title, no own use, only actual amount recovered.

How to solve Valuation Rules 31 to 35 and Pure Agent questions

Use this method for any question on special valuation or pure agent.

1Identify the type of supply: lottery, betting, casino, money changing, air ticket, insurance, used goods, voucher or a reimbursed expense.
2Check whether the rule is optional or mandatory. Rule 32 is at the supplier's option. Rules 31A and 31C are not.
3Pick the correct sub-rule and note its conditions, such as no ITC for used goods or domestic versus international for air tickets.
4Extract the base amount: face value, gross currency amount, basic fare, premium or selling and purchase price.
5Apply the formula exactly and check any minimum, maximum or floor of zero.
6For reimbursed costs, test each rule 33 condition and the four limbs of the pure agent definition. Exclude only the amounts that pass.
7Add GST at the rate given on the value you have found, and state your conclusion clearly.

Quickest way: Ten-second sort

When to use it: Use it for MCQs in Section A, where you must pick the correct value fast.

Air ticket: 5% or 10% of basic fare, not of the total fare.
Used goods: sale minus purchase, zero if a loss, and only without ITC.
Money changing slab: remember 1%, ₹1,000 + 0.5%, ₹5,500 + 0.1%, with ₹250 minimum and ₹60,000 maximum.
Lottery: divide by 1.4, that is 100/140, on the higher of face or notified price.
Disbursement: if any of the three rule 33 conditions fails, GST applies on the full amount.

Common mistakes in Valuation Rules 31 to 35 and Pure Agent

Applying 5% or 10% to the full air fare
Students ignore the definition of basic fare.
Fix: Use only the part of the fare on which the airline normally pays commission.
Taking a negative margin on used goods as a negative value
The formula looks like simple subtraction.
Fix: If selling price is less than purchase price, the value is ignored, so it is nil.
Using the margin scheme when ITC was taken on the purchase
Students forget the condition in rule 32(5).
Fix: Margin value is allowed only if no input tax credit was availed on the purchase. Otherwise use the normal value.
Excluding every reimbursed expense as a pure agent cost
Students treat 'at actual' as enough.
Fix: Test all rule 33 conditions: authorisation, separate indication in the invoice, and supplies additional to the agent's own services. Costs the agent uses for his own supply stay in the value.
Mixing the money changing slab with the RBI reference rate method
Both sit in rule 32(2).
Fix: Clause (a) is the default rate-difference method. Clause (b) is an optional slab. Once chosen for a financial year, the option cannot be withdrawn during that year.
Deducting refunds from casino value
Students think returned chips reduce turnover.
Fix: The proviso to rule 31C bars deduction of amounts refunded on return of tokens.

Worked examples

Example 1

A Delhi money changer sells US dollars worth ₹4,50,000 (gross amount) to a customer and chooses the optional slab under rule 32(2)(b). Find the value of supply. Also find the value if the gross amount is ₹80,000 and, separately, ₹12,00,000.

Show the solution

Case ₹4,50,000 lies above ₹1,00,000 and up to ₹10,00,000.
Value = ₹1,000 + 0.5% of ₹4,50,000.
0.5% of ₹4,50,000 = ₹2,250.
Value = ₹1,000 + ₹2,250 = ₹3,250.
Case ₹80,000 is up to ₹1,00,000: 1% = ₹800, which is above the minimum ₹250, so ₹800.
Case ₹12,00,000 exceeds ₹10,00,000: ₹5,500 + 0.1% of ₹12,00,000 = ₹5,500 + ₹1,200 = ₹6,700. This is below the ₹60,000 maximum.

Answer: Values are ₹3,250 for ₹4,50,000, ₹800 for ₹80,000 and ₹6,700 for ₹12,00,000.

Example 2

A CMA firm, Rao & Associates, files incorporation papers for Sunrise Pvt Ltd. It charges professional fees of ₹40,000. It also pays ₹15,000 registration fee to the Registrar of Companies on Sunrise's authorisation, shown separately in the invoice. It also pays ₹5,000 for courier of its own documents, billed as 'courier charges'. Find the value of supply.

Show the solution

Professional fees of ₹40,000 are Rao's own supply, so they are taxable.
Registration fee ₹15,000 is compulsorily levied on the company. Rao pays on authorisation, shows it separately in the invoice, and it is additional to his own services. It also matches the illustration in rule 33.
So ₹15,000 is excluded as a pure agent disbursement.
Courier charge of ₹5,000 is Rao's own cost of delivering his service. Rao is not acting as agent in buying a service for Sunrise, so it is not excluded.
Value = ₹40,000 + ₹5,000 = ₹45,000.

Answer: Value of supply is ₹45,000. The ₹15,000 is excluded as a pure agent cost; the ₹5,000 courier cost is included.

Exam tips

In MCQs, watch the wording 'basic fare', 'no ITC' and 'at the option of the supplier'. The trap is usually in one of these.
For pure agent questions, go through each condition in order and write one line on each. Marks follow the reasoning.
Learn the money changing slab and the lottery value as numbers. Questions often test only these.
Always end with a clear value of supply, then GST if the rate is given.
Lottery text changed w.e.f. 22.09.2025. Use the current 100/140 figure, not the older 100/112 or 100/128.

Practice questions from Valuation under GST

Valuation Rules 31 to 35 and Pure Agent in other exams

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

Valuation Rules 31 to 35 and Pure Agent: frequently asked questions

What are the conditions for a pure agent under rule 33?

The supplier must pay the third party on the recipient's authorisation. The payment must be separately shown in the invoice. The supplies procured must be in addition to the supplier's own services. The supplier must also meet the Explanation: contract as pure agent, no title, no own use, and recovery of only the actual amount.

Is the margin scheme for used goods compulsory?

No. Rule 32 values apply at the option of the supplier. The margin value is available only if no input tax credit was taken on the purchase of the goods. A negative margin is ignored.

How is an air travel agent's value of supply found?

It is deemed to be 5% of the basic fare for domestic bookings and 10% of the basic fare for international bookings. Basic fare is the part of the air fare on which the airline normally pays commission to the agent.

Can a money changer switch between methods during the year?

A supplier who opts for the slab method under clause (b) for a financial year cannot withdraw that option during the rest of that financial year.