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

A package of cigarettes bears a declared retail sale price of Rs 118 inclusive of tax. Assume the applicable taxes for Rule 31D total 18% (sum of applicable tax rates). What is the value of supply under Rule 31D?

The value is Rs 100. Tax is computed as 118 x 18/118 = Rs 18, and this is deducted from the retail sale price of Rs 118, since the retail sale price is tax-inclusive under Rule 31D.

  1. ARs 96.76
  2. BRs 100.00Correct
  3. CRs 118.00
  4. DRs 139.24

Explanation

Tax amount = RSP x rate / (100 + sum of rates) = 118 x 18 / 118 = Rs 18. Value = 118 - 18 = Rs 100. Rs 96.76 wrongly deducts 18% of 118 (Rs 21.24). Rs 139.24 wrongly adds tax on top.

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