Direct and Indirect Taxation · Time and Value of Supply

GST Valuation Rules 27 to 35 Explained

Updated 10 October 2026 · Fact-checked

GST valuation rules (Rules 27 to 35 of the CGST Rules) tell you the value of supply when the price is not the transaction value under Section 15. Use open market value first, then like kind and quality, then cost plus 10% (Rule 30), then a reasonable-means residual method (Rule 31). Pure agent expenses are excluded under Rule 33.

Understand Valuation Rules and Methods

Under Section 15 of the CGST Act, the value of a supply is normally the transaction value: the price actually paid or payable, when the supplier and recipient are not related and price is the only consideration. The valuation rules apply when that test fails. They sit in Chapter IV of the CGST Rules, 2017 (Rules 27 to 35).

There are three common trigger situations. First, the consideration is not wholly in money (barter, exchange, goods or services given in return). Second, the supplier and recipient are related persons or distinct persons (for example head office and branch in different states, or a company and its group entity), so the price may not be a true market price. Third, the supply goes through an agent, so the price between principal and agent may not reflect the market.

Each rule gives you a ladder. You start at the top and move down only if the step above cannot be applied. The first step is usually open market value (OMV): the full value in money, excluding taxes, that a person would pay to get that supply, at that time, in a transaction between unrelated parties where price is the sole consideration. If OMV is not available, you look for the value of supply of like kind and quality. If that is also not available, you use Rule 30 (cost plus 10%) and then Rule 31 (residual method, any reasonable means consistent with Section 15 and the rules).

Some rules do different jobs. Rule 33 says that expenses paid as a pure agent of the recipient are excluded from value, if all the listed conditions are met. Rule 34 deals with converting foreign currency, and Rule 35 gives the way to separate tax from a price that already includes GST. Rule 31A (lottery, betting, gambling) and Rule 32 (certain special supplies such as money changing, air travel agents, second-hand goods) are special cases, so read the facts first to see whether they apply.

The skill the examiner tests is simple: identify the situation, pick the right rule, walk down the ladder in the right order, and show each step you rejected or used.

Key rules to remember

Rule 27: consideration not wholly in money: Order: (a) OMV of the supply → (b) money consideration + money equivalent of non-money consideration, if known at time of supply → (c) value of like kind and quality → (d) Rule 30, then Rule 31; Move down only when the step above is not available. Note that step (b) needs the money equivalent to be known at the time of supply.
Rule 28: supply between distinct or related persons (not through an agent): Order: (a) OMV → (b) like kind and quality → (c) Rule 30, then Rule 31; Option for goods meant for further supply as such by the recipient: supplier may take 90% of the price the recipient charges an unrelated customer for goods of like kind and quality. If the recipient is eligible for full input tax credit, the value declared in the invoice is deemed to be the OMV.
Rule 29: goods supplied through an agent: (a) OMV of the goods, or at the supplier's option 90% of the price the agent charges his unrelated customer for goods of like kind and quality → (b) if not determinable, Rule 30, then Rule 31; Applies where goods are supplied by the principal to the agent and the agent undertakes to supply them on the principal's behalf.
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; That is, cost plus 10%. Used only when the earlier steps fail.
Rule 31: residual method: Value = any reasonable means consistent with Section 15 and the valuation rules; For supply of services, the supplier may choose Rule 31 directly, disregarding Rule 30.
Rule 33: pure agent expenses: Value of supply = supplier's own charges only; pure agent reimbursements are excluded if all conditions are met; Conditions: supplier acts as pure agent of the recipient; payment is made to a third party with the recipient's authorisation; recipient receives and uses the third-party service; recipient is liable to pay; payment is separately shown in the invoice; supplier recovers only the actual amount paid; the services procured are in addition to the supplier's own services.
Rule 35: price inclusive of GST: Tax amount = (Value inclusive of tax × sum of tax rates in %) ÷ (100 + sum of tax rates in %); Taxable value = Inclusive value − tax amount; For intra-state supply the sum of tax rates is CGST rate + SGST/UTGST rate. For inter-state supply it is the IGST rate.

How to solve Valuation Rules and Methods questions

Use this method for any question on valuation under Rules 27 to 35. The goal is to name the right rule and show the ladder so you pick up step marks.

1Read the facts and identify the trigger: non-money consideration, related or distinct persons, agent, pure agent reimbursement, foreign currency, or price inclusive of tax.
2Name the rule you are applying (Rule 27, 28, 29, 33 and so on) in one line, with the reason.
3Write the ladder in order and tick off each step: OMV, then like kind and quality, then Rule 30 (110% of cost), then Rule 31. Say clearly which step the facts allow.
4Check the special options: the 90% option for goods meant for further supply, the full ITC deemed-OMV proviso for related or distinct persons, and the Rule 31 option for services.
5For pure agent items, test every condition in Rule 33. If even one fails, include the amount in value.
6Calculate the value, then compute GST at the given rate, applying Rule 35 if the price already includes tax.
7State the final value of supply and the tax payable in a clear last line.

Quickest way: Ladder-and-filter shortcut

When to use it: Use this for MCQs and for short parts of a descriptive question where you must pick the correct value in a minute or two.

Spot the key phrase: not in money → Rule 27; related or distinct → Rule 28; agent → Rule 29; cost given with no market data → Rule 30; reimbursement paid on behalf of customer → Rule 33.
Check the data given. If OMV is stated, use it and ignore cost figures. If only cost is stated, use cost × 110%.
For further-supply goods between related persons, compute 90% of the recipient's selling price to an unrelated customer.
In a pure agent question, subtract only the items that pass all conditions, then add GST on what remains.
If the price says inclusive of GST, divide by (100 + rate) and multiply by 100 to get the taxable value.

Common mistakes in Valuation Rules and Methods

Jumping straight to cost plus 10% (Rule 30) when OMV or like kind and quality value is given.
Students remember the 110% figure and treat it as the default method.
Fix: Remember Rule 30 is the third or fourth step. Use it only after OMV and like kind and quality are ruled out.
Applying the 90% option to every supply between related persons.
The 90% figure is memorised without its condition.
Fix: It applies only to goods intended for further supply as such by the recipient, and it is the supplier's option. It is not available for services or for goods that the recipient uses or processes.
Excluding all reimbursed expenses as pure agent costs.
Students see words such as 'reimbursed' or 'on behalf of' and stop checking.
Fix: Test each Rule 33 condition. Expenses incurred in the supplier's own name, not separately shown in the invoice, or recovered at more than actual cost, form part of value.
Adding the money equivalent of non-money consideration even when OMV is available.
Students mix up Rule 27(a) and Rule 27(b).
Fix: Open market value comes first. Add money plus the money equivalent only if OMV is not available and the equivalent is known at the time of supply.
Calculating GST on the tax-inclusive price without backing out the tax.
The words 'inclusive of GST' are missed in the facts.
Fix: Underline 'inclusive'. Tax = inclusive price × rate ÷ (100 + rate). Taxable value = inclusive price − tax.
Using Rule 29 for any sale by an agent.
The word 'agent' triggers the rule automatically.
Fix: Rule 29 covers goods supplied by the principal to an agent who will supply them on the principal's behalf. Check the direction of supply and the facts before using it.

Worked examples

Example 1

Surya Foods Pvt. Ltd., Pune supplies packaged goods to its related distributor, Gupta Distributors, who will sell them onward as such. No OMV or like kind and quality value is available. The cost of production is ₹4,00,000. Gupta Distributors sells goods of like kind and quality to an unrelated customer for ₹5,00,000. Surya Foods opts for the 90% route where available. Gupta is not eligible for full input tax credit. Find the value of supply and GST at 18%.

Show the solution

Situation: supply between related persons, not through an agent. Rule 28 applies.
Ladder: OMV is not available. Like kind and quality value is not available.
The goods are meant for further supply as such by the recipient, so the supplier may opt for 90% of the price the recipient charges an unrelated customer.
Value under the option = 90% × ₹5,00,000 = ₹4,50,000.
For comparison, Rule 30 would give 110% × ₹4,00,000 = ₹4,40,000. It is not used because the supplier has chosen the 90% option.
GST at 18% = 18% × ₹4,50,000 = ₹81,000.

Answer: Value of supply = ₹4,50,000. GST at 18% = ₹81,000.

Example 2

Kaveri Logistics provides clearing services to Mehra Exports. It charges ₹25,000 for its own services. It also paid ₹60,000 of port fees to the port authority as a pure agent of Mehra Exports, with all Rule 33 conditions met and the amount shown separately in the invoice. In addition, it paid ₹5,000 for local courier services in its own name and recovered the same amount from Mehra Exports, but this does not meet the pure agent conditions. GST rate on the services is 18%. Find the value of supply and GST payable.

Show the solution

Situation: reimbursement of expenses, so Rule 33 applies.
Port fees of ₹60,000 meet all pure agent conditions, so they are excluded from value.
Courier charge of ₹5,000 was incurred in the supplier's own name and does not meet the conditions, so it forms part of the value.
Value of supply = ₹25,000 + ₹5,000 = ₹30,000.
GST at 18% = 18% × ₹30,000 = ₹5,400.

Answer: Value of supply = ₹30,000. GST payable = ₹5,400. The ₹60,000 port fees are excluded as pure agent expenditure.

Exam tips

Write the rule number and the reason in the first line. Examiners award marks for choosing the right rule even if the arithmetic slips.
Always list the ladder in order and state which steps were not available. This shows the method and secures step marks.
In MCQs, read the data carefully. If OMV is given, cost figures are usually there to mislead you.
For pure agent questions, go through the conditions one by one in your answer. A single missed condition changes the value.
Check for 'inclusive of GST' and for the recipient's eligibility for full input tax credit in related person cases before you calculate.

Practice questions from Time and Value of Supply

Valuation Rules and Methods 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 and Methods: frequently asked questions

What is the difference between related persons and distinct persons in GST valuation?

Related persons are those described in the explanation to Section 15, such as persons in the same business or where one controls the other. Distinct persons are, broadly, establishments of the same person in different states, such as head office and branch. Rule 28 covers valuation of supplies between both.

When can a pure agent's expenses be excluded from value?

Only when all the conditions in Rule 33 are met. The supplier must act as the recipient's pure agent, the recipient must authorise and be liable for the payment, the amount must be shown separately and recovered at actual cost, and the third-party service must be in addition to the supplier's own services. If any condition fails, the amount forms part of value.

How is value determined when the price is not in money?

Under Rule 27, first use the open market value of the supply. If that is not available, add the money consideration and the money equivalent of the non-money consideration, if known at the time of supply. Then look at like kind and quality, and finally Rule 30 or Rule 31.

What does the residual method in Rule 31 mean?

Rule 31 lets you determine value by any reasonable means consistent with Section 15 and the valuation rules. You use it when the earlier methods cannot be applied. For services, the supplier can choose it directly without first applying Rule 30.