Goods and Services Tax (GST) and Corporate Tax Planning · Supply under GST

Value of Taxable Supply under Section 15 of CGST Act

Updated 11 October 2026 · Fact-checked

Value of taxable supply is the base on which GST is charged. Under Section 15, it is the transaction value: the price actually paid or payable, where supplier and recipient are not related and price is the sole consideration. You add the listed inclusions, deduct eligible discounts, and apply prescribed rules if the price test fails.

Understand Value of Taxable Supply under Section 15

GST is charged as a percentage of value. So the first question in any GST computation is: what is the value? Section 15 answers it.

The starting point is the transaction value. It is the price actually paid or payable for the supply. Two conditions must hold: the supplier and recipient are not related, and the price is the sole consideration. If both hold, the invoice price is the base, subject to adjustments.

Then you adjust. Section 15(2) lists amounts that are added to the value, even if billed separately. Section 15(3) lists discounts that are not part of the value. The result is the taxable value.

If the transaction value test fails, for example because the parties are related or there is non-monetary consideration, Section 15(1) does not apply. The value is then determined in the manner prescribed under Section 15(4). Section 15(5) also lets the Government, on the Council's recommendation, notify supplies whose value is fixed by prescribed rules.

In exams, the real marks come from sorting each item in the facts into three bins: include, exclude, or not covered by Section 15(1) at all. Remember that GST itself charged under the GST laws is not added to the value; the base is before GST.

Key rules to remember

Transaction value: Transaction value = price actually paid or payable for the supply; Applies only if supplier and recipient are not related and price is the sole consideration (Section 15(1)).
Taxable value: Taxable value = Transaction value + Section 15(2) inclusions − eligible Section 15(3) discounts; Amounts already in the price are not added again. Compute GST on this value.
Inclusions under Section 15(2): (a) other-law taxes, duties, cesses, fees, charges if charged separately; (b) supplier's liability paid by recipient; (c) incidental expenses such as commission and packing, and things done at or before delivery; (d) interest, late fee, penalty for delayed payment; (e) subsidies linked to price; In (a), taxes under CGST, SGST, UTGST and the Compensation Act are excluded from this clause. In (e), Central and State Government subsidies are excluded.
Discount before or at supply: Excluded from value if duly recorded in the invoice; Section 15(3)(a).
Discount after supply: Excluded if (i) established by agreement at or before supply and linked to specific invoices, and (ii) recipient has reversed the ITC attributable to it, on the basis of the supplier's document; Section 15(3)(b). Both conditions must be met.
Related persons: Officers or directors of one another's businesses; legally recognised partners; employer and employee; person holding 25% or more of voting stock or shares of both; one controls the other; both controlled by a third person; together control a third person; members of the same family; sole agent, distributor or concessionaire; The Explanation to Section 15. 'Person' includes legal persons.

How to solve Value of Taxable Supply under Section 15 questions

Use this sequence for any valuation question. It keeps you inside the section and shows the examiner your reasoning.

1Identify the supply and the supplier and recipient.
2Check whether they are related persons under the Explanation to Section 15, including sole agent, distributor or concessionaire.
3Check whether the price is the sole consideration. If not, or if they are related, state that Section 15(1) cannot be applied and the value is determined as prescribed under Section 15(4).
4If the transaction value applies, start with the price actually paid or payable.
5Go through each extra charge and test it against Section 15(2)(a) to (e). Add those that fit and are not already in the price.
6Test each discount against Section 15(3). Deduct it only if the conditions are met.
7Compute the taxable value, then apply GST on it. Do not include GST in the base.
8Write a clear conclusion with the final value and one line of reasoning per item.

Quickest way: Include-exclude table method

When to use it: For numerical questions with a list of charges and discounts, when time is short.

Write the invoice price on the first line.
List every other item with a tag: Add (clause), Not added (reason), or Deduct (condition met).
Check the related-person and sole-consideration tests in one line at the top.
Total the adds and deducts, then compute GST.
Write one reason in a few words beside each item. This earns method marks even if arithmetic slips.

Common mistakes in Value of Taxable Supply under Section 15

Adding CGST or SGST to the value before computing GST.
Students read 'taxes' in Section 15(2)(a) and stop.
Fix: Clause (a) covers taxes under other laws. Taxes under CGST, SGST, UTGST and the Compensation Act are excluded from it.
Allowing a post-supply discount without checking conditions.
Students treat every discount as excluded.
Fix: A discount after supply needs an agreement at or before supply linked to invoices, and reversal of ITC by the recipient. Both are required.
Applying transaction value between related persons.
The invoice price looks like a clear figure.
Fix: Check the related-person list first. If related, Section 15(1) does not apply and the value is determined as prescribed.
Adding a Government subsidy to value.
Students remember that subsidies are included.
Fix: Only subsidies directly linked to the price are included, and Central and State Government subsidies are excluded.
Missing the 25% test or the sole agent rule.
Students recall only family and employer relationships.
Fix: Learn all the limbs, including holding 25% or more of the voting stock of both, and sole agent, distributor or concessionaire.
Adding an expense twice.
Packing or commission may already be part of the quoted price.
Fix: Add an item only if it is charged separately or not yet included in the price paid or payable.

Worked examples

Example 1

Sharma Traders, Jaipur, sells goods to Gupta Stores, an unrelated buyer. Invoice price is ₹1,00,000. Separately charged: packing ₹2,000 and commission ₹3,000 charged by the supplier to the buyer, and interest of ₹1,500 for delayed payment. A trade discount of ₹5,000 is shown on the invoice. Find the taxable value.

Show the solution

Parties are unrelated and price is the sole consideration, so transaction value applies under Section 15(1).
Assume the invoice price of ₹1,00,000 is before the trade discount and the other charges.
Packing and commission are incidental expenses charged by the supplier: add ₹2,000 + ₹3,000 = ₹5,000 under Section 15(2)(c).
Interest for delayed payment is added under Section 15(2)(d): ₹1,500.
The trade discount is recorded in the invoice, so it is excluded from value under Section 15(3)(a): deduct ₹5,000.
Taxable value = ₹1,00,000 + ₹5,000 + ₹1,500 − ₹5,000 = ₹1,01,500.

Answer: Taxable value is ₹1,01,500. GST is charged on this amount.

Example 2

Mehta Ltd supplies machines to Mehta Services Pvt Ltd. Rohit Mehta is a director of Mehta Ltd and holds 30% of the voting shares of both companies. Contract price is ₹8,00,000. Can the price be treated as the transaction value?

Show the solution

Check relationship. A person who directly or indirectly holds 25% or more of the outstanding voting stock or shares of both is a related person under the Explanation to Section 15.
Rohit Mehta holds 30% in both companies, so the two companies are related persons.
Section 15(1) requires that supplier and recipient are not related.
The condition fails, so the contract price cannot be accepted automatically as the transaction value.
The value must be determined in the manner prescribed under Section 15(4).

Answer: No. The companies are related through the 30% holding, so Section 15(1) does not apply and the value is determined under the prescribed rules, not by the contract price alone.

Exam tips

Open every valuation answer with the related-person and sole-consideration check. Examiners look for it.
Quote the clause, such as Section 15(2)(c) or 15(3)(b), beside each item.
For discounts, state each condition separately and say whether it is met.
Show a clean table of added and excluded items, then a one-line conclusion.
If the question gives GST rates, compute the tax on the final taxable value at the end.

Practice questions from Supply under GST

Value of Taxable Supply under Section 15 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 under Section 15: frequently asked questions

What is transaction value under GST?

It is the price actually paid or payable for a supply. It applies where supplier and recipient are not related and the price is the sole consideration.

Are post-sale discounts excluded from value?

Only if an agreement at or before the supply establishes the discount and links it to invoices, and the recipient has reversed the ITC attributable to it. Otherwise it stays in the value.

Who are related persons under Section 15?

They include directors or officers of one another's businesses, partners, employer and employee, family members, persons in a control relationship, and those holding 25% or more of voting shares of both. A sole agent, distributor or concessionaire is also deemed related.

What if the price is not the sole consideration?

Then the value cannot be fixed under Section 15(1). It is determined in the manner prescribed under Section 15(4).