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CMA Final · Indirect Tax Laws and Practice · Valuation under GST

A manufacturer of specified pan masala declared an RSP of Rs 236 on packages (tax-inclusive, applicable tax 18%). Before the supply to the retailer, the RSP on the packages was altered upward to Rs 295. Under Rule 31D, the deemed value of supply per package is:

The deemed value is Rs 250. The increased RSP of Rs 295 replaces the original one, the tax content is 295 x 18/118 = Rs 45, and deducting it leaves Rs 250. Using the original Rs 236 would give Rs 200, which is wrong.

  1. ARs 200
  2. BRs 250Correct
  3. CRs 259.60
  4. DRs 295

Explanation

Under the Explanation, an altered RSP increased at any stage before, during or after the supply is the RSP. Tax = 295 x 18/118 = Rs 45. Value = 295 - 45 = Rs 250. Rs 200 uses the original RSP (236 - 36), the key mistake.

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