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

A manufacturer sells a pack of cigarettes with a declared retail sale price of ₹250 in Area X. In Area Y the same cigarettes are sold in packs declared at ₹280. Before supply, the manufacturer raises the declared price on Area X packs to ₹260 by re-stickering. Applicable tax is 28% in total, no cess. What is the value of a pack supplied in Area X?

The value is about ₹203.13. The increased price of ₹260 applies to Area X, not the old ₹250 or Area Y's ₹280. Tax is 260 × 28/128 = ₹56.875, and subtracting it from ₹260 gives ₹203.125.

  1. A₹203.13Correct
  2. B₹195.31
  3. C₹218.75
  4. D₹182.26

Explanation

Explanation (d) says an altered, increased retail price at any stage is the retail sale price, and (e) says each area's declared price applies to that area. So Area X uses ₹260. Tax = 260 × 28/128 = ₹56.875. Value = 260 − 56.875 = ₹203.125, i.e. ₹203.13. Option B uses the old ₹250 price (195.31) and option C uses ₹280 (218.75).

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