Goods and Services Tax (GST) and Corporate Tax Planning · Value of Supply

Special Valuation Cases and Pure Agent under GST

Updated 11 October 2026 · Fact-checked

Special valuation cases are GST rules that replace the normal transaction value for particular supplies. They cover pure agent reimbursements (excluded from value if all conditions are met), money changing, used goods (margin only), lottery and vouchers. If no rule fits, the residual method applies. Identify the case, apply its rule, then add GST.

Understand Special Valuation Cases and Pure Agent

Normally, the value of a supply is the transaction value under section 15, meaning the price actually paid or payable, when the supplier and recipient are not related and price is the sole consideration. Some supplies do not fit this. The CGST Rules therefore give special valuation methods for them.

The most tested one is the pure agent. Suppose you are a professional who pays a government fee for your client and recovers exactly that amount. You are only a conduit. Rule 33 of the CGST Rules says such expenditure is excluded from your value of supply, but only if every condition of the rule is met. If one condition fails, the reimbursement becomes part of your value and attracts GST.

Rule 32 covers other special cases:

Money changing: tax is on a value fixed by the rule, not on the full amount exchanged. There are three parts. First, the spread between the buying or selling rate and the RBI reference rate, multiplied by the units of currency. Second, 1% of the gross amount of currency exchanged where the RBI reference rate is not available. Third, a separate slab option that the supplier may choose instead.
Used goods: a dealer who sells used goods as such, or after minor processing that does not change their nature, and who took no input tax credit on the purchase, pays tax only on the margin.
Vouchers, tokens and coupons: valued with reference to the goods or services that can be obtained against them. A voucher is defined in section 2(118) of the CGST Act. Check the current text of Rule 32 for the exact wording.

Lottery has its own rule, Rule 31A. The value is 100 ÷ (100 + rate of tax) of the face value of the ticket or of the price notified in the Official Gazette by the organising State, whichever is higher. It is not valued by reference to the dealer's margin.

Now the order of the general valuation rules. Start with transaction value under section 15. Where it cannot be used, the CGST Rules give fallbacks in sequence: Rule 27 (consideration not wholly in money), Rule 28 (distinct or related persons, other than through an agent), Rule 29 (goods made or received through an agent) and Rule 30 (cost method: 110% of cost). The residual method (Rule 31) comes last. It applies where the value cannot be determined under Rules 27 to 30, and you use reasonable means consistent with the principles of section 15 and Rules 27 to 30.

The common thread: first ask whether a special rule exists for this supply. Only if none applies do you go through transaction value and the fallback sequence. Always check the current text of the Rules, because value provisions are amended from time to time.

Key rules to remember

Pure agent: value of supply: Value = own-account supply value only (reimbursed costs excluded); Rule 33. Excluded only if all conditions are met. Otherwise the reimbursement is added to value.
Pure agent conditions (summary): Authorised by recipient + recipient liable to pay third party + recipient knows the third party supplies + recipient receives and uses the goods or services + shown separately in invoice + recovered at actuals + in addition to own supplies; The supplier must hold no title to the goods or services, must not use them for himself, and must receive only the actual amount.
Money changing: spread method: Value = (buying or selling rate − RBI reference rate) × units of currency; Rule 32. Applies where the RBI reference rate for the currency is available.
Money changing: fall-back where RBI rate is not available: Value = 1% of the gross amount of currency exchanged, for each transaction; Rule 32. This fall-back belongs to the spread method. It applies only where the RBI reference rate is not available.
Money changing: slab option: Up to ₹1,00,000: 1% of gross amount, minimum ₹250. Above ₹1,00,000 and up to ₹10,00,000: ₹1,000 + 0.5% of amount above ₹1,00,000. Above ₹10,00,000: ₹5,500 + 0.1% of amount above ₹10,00,000, maximum ₹60,000; Rule 32. A separate option that the supplier may choose instead of the spread method.
Used goods: margin scheme: Value = Selling price − Purchase price (negative margin ignored); Rule 32. Applies to a dealer in used goods sold as such or after minor processing that does not change their nature, and only where no input tax credit was availed on purchase.
Vouchers, tokens, coupons: Value = determined under Rule 32 by reference to the goods or services redeemable against the instrument; A voucher is defined in section 2(118). Postage stamps are excluded. Confirm the exact wording in the current text of Rule 32 before quoting it.
Lottery: Value = 100 ÷ (100 + rate of tax) × face value of ticket or price notified by the organising State, whichever is higher; Rule 31A. Lottery is a special case with its own rule.
Cost method: Value = 110% of cost of production, manufacture, acquisition or provision of service; Rule 30. Applies where the value cannot be determined under Rules 27 to 29. Rule 29 deals with supplies made or received through an agent.
Residual method: Value = reasonable means consistent with section 15 and Rules 27 to 30; Rule 31. Applies where the value cannot be determined under Rules 27 to 30, including Rule 29 for agents and Rule 30 for cost.

How to solve Special Valuation Cases and Pure Agent questions

Use this order for any valuation question in this topic. Write the rule you apply, because marks go for the provision and the reasoning.

1Read the facts and list every amount: the supplier's own charge, any recovery from the recipient, purchase cost, and the rate of tax.
2Identify the type of supply: pure agent reimbursement, money changing, used goods, voucher or coupon, lottery (Rule 31A), or none of these.
3If a reimbursement is involved, test each pure agent condition against the facts. Note which one fails, if any.
4Apply the special rule and compute the value. For used goods, confirm that no input tax credit was taken and ignore a negative margin. For lottery, take 100 ÷ (100 + rate of tax) of the higher of the face value and the price notified by the organising State.
5If no special rule fits, try transaction value under section 15. If that cannot be used, go through Rules 27 to 29 as the facts require (consideration not in money, related or distinct persons, agent), then the cost method under Rule 30, and finally the residual method under Rule 31.
6Compute GST on the value, deciding between CGST plus SGST and IGST using the place of supply.
7State the conclusion in one line: the value, the tax, and the invoice total if asked.
8Add a drafting or compliance point, such as showing the reimbursement as a separate line on the invoice.

Quickest way: Rule-spotting shortcut

When to use it: Use when you have limited time and the question names the type of supply clearly.

Underline the keywords: reimburse, on behalf of, currency, second-hand, voucher, lottery, agent.
Match the keyword to its rule: reimburse or on behalf of → Rule 33; currency → Rule 32 money changing; second-hand → Rule 32 used goods; voucher or coupon → Rule 32 voucher provision; lottery → Rule 31A; goods through an agent → Rule 29; no rule fits and Rules 27 to 30 fail → Rule 31.
Compute the value in one line, then multiply by the rate.
Check the one condition that usually decides the answer: pure agent conditions, or no ITC for used goods.

Common mistakes in Special Valuation Cases and Pure Agent

Excluding every reimbursement as pure agent expense.
Students assume that any amount recovered at actuals is a reimbursement.
Fix: Test every pure agent condition. If the recipient did not authorise the payment, if it is not shown separately, or if the supplier uses the goods himself, add the amount to value.
Applying the margin scheme to goods on which input tax credit was taken.
Students remember 'second-hand goods, tax on margin' and forget the condition.
Fix: Check whether credit was availed. If it was, value the supply under the normal rules and use the full selling price.
Taxing the full amount of currency exchanged.
Students treat the exchange like a normal sale of goods.
Fix: Use the Rule 32 value: the spread over the RBI reference rate (1% of the gross amount if that rate is not available), or the slab amount if the supplier opts for it. Tax only that value.
Using the margin even when it is negative.
Students subtract blindly and show a negative taxable value.
Fix: State that where selling price is below purchase price, the value is ignored, so no tax is payable on that supply.
Mixing up the cost method and the residual method, or skipping Rule 29.
Both are described as fallback rules, and the sequence between Rule 27 and Rule 31 is not remembered.
Fix: Cost method (Rule 30) uses 110% of cost and applies where Rules 27 to 29 (including Rule 29 for agents) do not give the value. Residual method (Rule 31) applies only after Rules 27 to 30 fail and uses reasonable means consistent with section 15 and those rules.

Worked examples

Example 1

Ananya & Associates, a company secretary firm in Mumbai, incorporates a company for a client. It charges a professional fee of ₹50,000. On the client's written authority, it pays ROC fees of ₹8,000 and stamp duty of ₹12,000 to the Government and recovers the same amounts at actuals. Both are shown separately in the invoice. Assume GST at 18%. Find the value of supply, GST and invoice total. Then find GST if the reimbursements were not shown separately and were just part of the bill.

Show the solution

The firm pays fees and duty to third parties on behalf of the client, as authorised, and recovers actuals. The client knows these are Government charges. They are shown separately. So the firm acts as a pure agent under Rule 33.
The ROC fee and stamp duty are therefore excluded from the value of supply.
Value of supply = ₹50,000.
GST at 18% = 50,000 × 18% = ₹9,000.
Invoice total = 50,000 + 9,000 + 8,000 + 12,000 = ₹79,000.
If the amounts were not shown separately, a pure agent condition fails. Value = 50,000 + 8,000 + 12,000 = ₹70,000.
GST at 18% on ₹70,000 = ₹12,600.

Answer: With pure agent treatment: value ₹50,000, GST ₹9,000, invoice total ₹79,000. Without it: value ₹70,000 and GST ₹12,600.

Example 2

Mehta Motors, a registered dealer in used cars, buys a used car from an unregistered individual for ₹4,20,000 and sells it after minor cleaning for ₹5,00,000. It has taken no input tax credit on the purchase. Assume GST at 18%. Find the value and GST. If it had sold the car for ₹4,00,000, what would be the value?

Show the solution

The dealer deals in used goods, sold as such after minor processing that does not change their nature, and has taken no input tax credit. The used goods margin provision of Rule 32 applies.
Value = selling price − purchase price = 5,00,000 − 4,20,000 = ₹80,000.
GST at 18% = 80,000 × 18% = ₹14,400.
If sold at ₹4,00,000, the difference is 4,00,000 − 4,20,000 = −₹20,000.
A negative margin is ignored, so the value is nil and no tax is payable on that supply.

Answer: Value ₹80,000 and GST ₹14,400. At a sale price of ₹4,00,000 the margin is negative and ignored, so no tax is payable.

Exam tips

Always name the rule you apply (Rule 33, Rule 32, Rule 31) before computing. Graders look for the provision first.
In pure agent questions, go through each condition against the facts and say which one is met or failed. This is where the marks lie.
For money changing, memorise the three slab bands and show the arithmetic band by band.
State the condition for the margin scheme (no ITC) in the first line of the answer. Add that a negative margin is ignored.
Check the current text of the Rules before the exam, since values and rates change by amendment.

Practice questions from Value of Supply

Special Valuation Cases 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.

Special Valuation Cases and Pure Agent: frequently asked questions

What is a pure agent in GST valuation?

A pure agent pays third parties on behalf of the recipient, holds no title to the goods or services, does not use them for himself and recovers only actual cost. If all Rule 33 conditions are met, the reimbursement is excluded from the value of his supply.

Is pure agent reimbursement always outside GST value?

No. It is excluded only if every condition of Rule 33 is met, including separate indication in the invoice and recovery at actuals. If any condition fails, the amount forms part of the value of supply and is taxed.

How is a money changer's supply valued?

Under Rule 32, the value is based on the spread over the RBI reference rate, or, at the supplier's option, on slabs: 1% up to ₹1,00,000, then ₹1,000 plus 0.5% of the excess up to ₹10,00,000, then ₹5,500 plus 0.1% of the excess, subject to a maximum of ₹60,000.

When does the margin scheme for used goods apply?

It applies to a dealer in used goods who sells them as such or after minor processing, and who has availed no input tax credit on the purchase. The value is selling price minus purchase price, and a negative margin is ignored.