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CA Intermediate · Taxation · Value of Supply

Gupta Furniture, Lucknow, sold a sofa set for Rs 30,000 and also charged Rs 2,000 for assembly at the customer's home, plus Rs 1,500 as a refundable security deposit for returnable packing that will be refunded on return of the crates. The customer returned no crates yet and the deposit is not applied as consideration for the supply. Ignoring GST, what is the value of supply?

The value of supply is Rs 32,000. The Rs 2,000 assembly charge is incidental to the supply and is included, while the refundable security deposit is not treated as consideration for the supply, so it is excluded from value.

  1. ARs 30,000
  2. BRs 32,000Correct
  3. CRs 33,500
  4. DRs 31,500

Explanation

Assembly charged by the supplier in relation to the supply is included: 30,000 + 2,000 = 32,000. A refundable security deposit not applied as consideration for the supply is not part of the value. Rs 33,500 wrongly includes the deposit.

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