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

A manufacturer in Pune sells goods to an unrelated dealer for a list price of ₹1,00,000. The tax invoice itself shows a trade discount of ₹5,000 and the net price of ₹95,000. Under Section 15 of the CGST Act, 2017, what is the value of supply on which GST is computed?

The value of supply is ₹95,000. A discount given at or before the time of supply and duly recorded in the invoice is excluded from value under Section 15(3)(a), so GST applies only to the net price of ₹95,000 and not to the list price.

  1. A₹1,00,000, because discounts are never excluded
  2. B₹95,000, because the discount was given at the time of supply and recorded in the invoiceCorrect
  3. C₹97,500, because only half the discount is excluded
  4. D₹1,05,000, because discount is added back as an incidental expense

Explanation

Section 15(3)(a) excludes a discount given before or at the time of supply if it is duly recorded in the invoice. The invoice records the ₹5,000 discount, so value = 1,00,000 - 5,000 = ₹95,000. Taxing the full list price ignores the exclusion.

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