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Tax Laws and Practice · Time, Value and Place of Supply

Value of Taxable Supply: Transaction Value under Section 15

Updated 11 October 2026 · Fact-checked

Under Section 15 of the CGST Act, the value of a supply is its transaction value: the price actually paid or payable, when the parties are not related and price is the sole consideration. You add the statutory inclusions, deduct only eligible discounts, then apply GST to the result.

Understand Value of Taxable Supply: Transaction Value

GST is charged as a percentage of value. So the first question in any GST computation is: on what amount is tax charged? Section 15 answers this. The general rule is the transaction value, meaning the price actually paid or payable for the supply.

Transaction value works only when two conditions are met. First, the supplier and recipient are not related. Second, the price is the sole consideration. If either fails, sub-section (1) does not apply, and the value is determined in the prescribed manner (the valuation rules, covered in a separate topic).

Section 15(2) then lists what must be added to the price. These are: taxes, duties, cesses and fees under other laws (not GST or the Compensation Cess), if charged separately; amounts the supplier is liable to pay but the recipient incurred; incidental expenses such as commission and packing; interest, late fee or penalty for delayed payment; and subsidies directly linked to price, other than Central and State Government subsidies.

Section 15(3) lists what is not included: discounts. A discount given before or at the time of supply is excluded if it is recorded in the invoice. A discount given after the supply is excluded only if it was agreed in an agreement at or before the supply, is specifically linked to relevant invoices, and the recipient has reversed the input tax credit attributable to it.

The Explanation to section 15 defines related persons, for example directors of one another's businesses, partners, employer and employee, persons where a third person holds 25% or more of the voting stock of both, family members, and sole agents or distributors.

Key rules to remember

Transaction value
Value of supply = price actually paid or payable
Applies when supplier and recipient are not related and price is the sole consideration (section 15(1)).
Taxable value
Taxable value = price + section 15(2) inclusions − eligible discounts (section 15(3))
Include only what the law lists. GST itself is never part of the value.
Inclusions under section 15(2)
(a) other-law taxes/duties charged separately; (b) supplier's liabilities paid by recipient; (c) incidental expenses; (d) interest, late fee, penalty; (e) price-linked subsidies except Government subsidies
Learn as a five-item list.
Post-supply discount conditions
Agreement at or before supply + linked to invoices + recipient reverses ITC
All three conditions must be met. Discount at or before supply needs only to be recorded in the invoice.
GST amount
GST = taxable value × rate of tax
Rate is applied on value after adjustments.

How to solve Value of Taxable Supply: Transaction Value questions

Use this order for any section 15 question, theory or numerical.

  1. 1Check whether the supplier and recipient are related persons and whether price is the sole consideration. If not, say sub-section (1) does not apply and value follows the valuation rules.
  2. 2Start with the price actually paid or payable, excluding GST charged.
  3. 3Go through each item in section 15(2) and add those present: other-law taxes charged separately, supplier's liabilities borne by the recipient, incidental expenses, interest or late fee, and non-Government subsidies linked to price.
  4. 4Do not add GST, State GST, UTGST or Compensation Cess.
  5. 5Test each discount: was it recorded in the invoice before or at supply, or does it meet all three post-supply conditions? Deduct only eligible discounts.
  6. 6Add up to get the taxable value, then apply the GST rate if asked.
  7. 7Write the conclusion with the section reference.

Quickest way: Add-then-subtract checklist

When to use it: Use for numerical questions with many items listed in a short time.

  1. Write the price as the base.
  2. Tick each given item as Add, Ignore or Subtract in the margin.
  3. Add: separately charged other-law duties, commission, packing, interest on late payment, non-Government subsidy linked to price.
  4. Ignore: GST and Compensation Cess, and Government subsidies.
  5. Subtract: only discounts that pass section 15(3).
  6. Total the column and apply the rate.

Common mistakes in Value of Taxable Supply: Transaction Value

  • Adding GST or Compensation Cess to the value

    Students see 'tax' in section 15(2)(a) and include every tax.

    Fix: Section 15(2)(a) covers taxes under other laws only. It excludes CGST, SGST, UTGST and Compensation Cess.

  • Deducting every post-supply discount

    Students treat all discounts alike.

    Fix: A post-supply discount is excluded only if agreed at or before supply, linked to invoices, and ITC is reversed by the recipient.

  • Excluding all subsidies

    Students remember Government subsidies are excluded and generalise.

    Fix: Include subsidies directly linked to price. Exclude only those given by the Central or State Governments.

  • Applying transaction value to related-party deals without comment

    Students jump to the numbers.

    Fix: Check relatedness first. If the parties are related or price is not the sole consideration, section 15(1) does not apply.

  • Ignoring interest or late fee for delayed payment

    Students think it is a separate financial charge.

    Fix: Section 15(2)(d) includes interest, late fee or penalty for delayed payment of consideration in the value.

Worked examples

Example 1

Rohan Traders, Pune sold goods to Mehta Stores, an unrelated buyer, at a price of ₹2,00,000. It also charged separately ₹5,000 for packing and ₹3,000 as commission. A trade discount of ₹10,000 was recorded in the invoice. Mehta Stores paid late and was charged interest of ₹2,000. Compute the value of supply under section 15.

Show the solution
  1. The parties are unrelated and price is the sole consideration, so transaction value applies under section 15(1).
  2. Price: ₹2,00,000.
  3. Add packing ₹5,000 and commission ₹3,000 as incidental expenses under section 15(2)(c): ₹8,000.
  4. Add interest for delayed payment ₹2,000 under section 15(2)(d).
  5. The discount of ₹10,000 was given at the time of supply and recorded in the invoice, so it is excluded under section 15(3)(a).
  6. Value = 2,00,000 + 5,000 + 3,000 + 2,000 − 10,000 = ₹2,00,000.

Answer: Value of supply is ₹2,00,000.

Example 2

Anita Ltd. supplied goods to Bharat Ltd., an unrelated company, for ₹5,00,000 plus applicable GST. After the supply, Anita Ltd. gave a 4% discount of ₹20,000 under a clause in the original agreement, not linked to specific invoices. Bharat Ltd. reversed ITC on it. Anita Ltd. also received a ₹30,000 subsidy from a State Government and ₹40,000 from a private trust directly linked to the price of the goods. Find the value of supply.

Show the solution
  1. Transaction value applies as the parties are unrelated.
  2. Price excluding GST: ₹5,00,000.
  3. The post-supply discount fails section 15(3)(b)(i) because it is not specifically linked to relevant invoices, even though ITC was reversed. It cannot be deducted.
  4. The State Government subsidy of ₹30,000 is excluded under section 15(2)(e).
  5. The private trust subsidy of ₹40,000 is directly linked to price, so it is included.
  6. Value = 5,00,000 + 40,000 = ₹5,40,000.

Answer: Value of supply is ₹5,40,000.

Exam tips

  • Write the section number with each adjustment, for example 'section 15(2)(c)'. ICSI answers reward the provision, analysis and conclusion.
  • In numericals, show each item as included, excluded or deducted with a one-line reason. Marks are given for treatment even if the total slips.
  • Memorise the three conditions for a post-supply discount. Examiners test this often.
  • State the two conditions for transaction value at the start of theory answers, and mention the related-persons list in the Explanation.
  • If the facts show related parties or non-price consideration, say the valuation rules apply instead of forcing a transaction value.

Practice questions from Time, Value and Place of Supply

Value of Taxable Supply: Transaction Value in other exams

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

Value of Taxable Supply: Transaction Value: frequently asked questions

What is transaction value under GST?

It is the price actually paid or payable for a supply when the supplier and recipient are not related and the price is the sole consideration. This is the basic rule in section 15(1) of the CGST Act.

Is a discount given after the supply deducted from value?

Only if it is established in an agreement at or before the supply, specifically linked to relevant invoices, and the recipient has reversed the input tax credit attributable to it. If any condition fails, the discount is not excluded.

Are Government subsidies included in the value of supply?

No. Subsidies provided by the Central Government and State Governments are excluded. Other subsidies directly linked to price are included in the supplier's value.

Is interest on late payment part of value?

Yes. Section 15(2)(d) includes interest, late fee or penalty for delayed payment of any consideration for the supply.