Skip to content

CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Value of Supply

Gupta Pharma sells goods with a list price of Rs 5,00,000 to an unrelated buyer. The invoice records a discount of Rs 25,000. The buyer also pays Rs 15,000 of packing charges billed separately by the supplier and, under a prior written agreement linked to the invoice, later gets a further Rs 20,000 discount, but the buyer does not reverse the related ITC. Value of supply, ignoring GST?

The value of supply is Rs 4,90,000. The invoice discount of Rs 25,000 is excluded, and Rs 15,000 packing charges are added as incidental expenses. The later Rs 20,000 discount cannot be deducted because the recipient did not reverse the attributable input tax credit.

  1. ARs 4,70,000
  2. BRs 4,75,000
  3. CRs 4,90,000Correct
  4. DRs 4,55,000

Explanation

Invoice discount of Rs 25,000 is excluded: 5,00,000 - 25,000 = 4,75,000. Packing charged by supplier is included under section 15(2)(c): +15,000 = 4,90,000. The later Rs 20,000 discount fails because ITC is not reversed, so it is not deducted. Rs 4,70,000 wrongly deducts it.

Did you get it right without looking?

One question tells you little. A timed set on Value of Supply shows your real accuracy, how long you take and where you lose marks.

Practise Value of SupplyFree diagnostic mock

More Value of Supply questions