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CA Final · Indirect Tax Laws · Value of Supply

Gupta Electronics sold goods to Sharma Retail for Rs 1,00,000. The invoice recorded a trade discount of Rs 5,000 reducing the price from Rs 1,05,000. Under an agreement made before the supply and linked to the relevant invoices, a further 2% discount on the invoice value of Rs 1,00,000 was given after the supply through a credit note, and Sharma reversed the proportionate ITC. Sharma also paid Rs 3,000 as interest for delayed payment. What is the final value of supply by Gupta, excluding GST?

The value is Rs 1,01,000. Both the invoiced discount and the qualifying post-supply discount are excluded, taking the value to Rs 98,000, and the Rs 3,000 interest for delayed payment is added under section 15(2)(d).

  1. ARs 1,01,000Correct
  2. BRs 98,000
  3. CRs 1,03,000
  4. DRs 1,06,000

Explanation

The invoice discount of Rs 5,000 is excluded under section 15(3)(a), giving Rs 1,00,000. The post-supply 2% discount of Rs 2,000 qualifies under section 15(3)(b), as it is agreed at or before supply, linked to invoices and ITC is reversed, so it is also excluded, giving Rs 98,000. Interest for delayed payment of Rs 3,000 is included under section 15(2)(d), giving Rs 1,01,000. Rs 98,000 omits the interest.

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