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CA Intermediate · Taxation · Value of Supply

Gupta Logistics, Delhi, a registered person, supplied goods to Rao Retail, Delhi, on an invoice showing: price of goods Rs 1,20,000; packing charges billed separately Rs 5,000; freight and insurance charged by the supplier Rs 7,000; subsidy received from a State Government directly linked to the price of this supply Rs 8,000; and a discount of Rs 3,000 allowed on the invoice itself. Interest on delayed payment of Rs 2,000 was later received by the supplier. What is the value of supply? (Ignore GST.)

The value of supply is Rs 1,31,000. Packing, freight, insurance and late payment interest are added to the price, the invoice discount is deducted, and a subsidy from the Government is not included. So 1,20,000 + 5,000 + 7,000 + 2,000 - 3,000 = 1,31,000.

  1. ARs 1,36,000
  2. BRs 1,38,000Correct
  3. CRs 1,40,000
  4. DRs 1,31,000

Explanation

Include price 1,20,000, packing 5,000, freight and insurance 7,000, the directly linked subsidy 8,000, and late payment interest 2,000 = 1,42,000. Deduct the invoice discount 3,000 = 1,39,000. Check: section 15(2) covers incidental expenses, interest for delayed payment and subsidies linked to price (excluding Government subsidies). Government subsidies are excluded, so remove 8,000: 1,42,000 - 8,000 = 1,34,000, minus 3,000 = Rs 1,31,000.

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