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

Hari Motors sells a vehicle to Gita for Rs 4,00,000. Hari had to bear a Rs 15,000 amount in relation to this supply, which Gita paid directly to a third party, and the amount was not included in the price payable to Hari. Under Section 15(2)(b), the value of supply is:

The value of supply is Rs 4,15,000. Section 15(2)(b) includes any amount the supplier is liable to pay in relation to the supply that the recipient incurred and that is not in the price, so the Rs 15,000 is added to Rs 4,00,000.

  1. ARs 4,15,000, as the amount the supplier is liable to pay but incurred by the recipient is includedCorrect
  2. BRs 4,00,000, as it was paid to a third party
  3. CRs 3,85,000, as the recipient's payment is a deduction
  4. DRs 4,15,000, only if Gita and Hari are related

Explanation

Section 15(2)(b) includes any amount the supplier is liable to pay in relation to the supply but which the recipient incurred and which is not in the price. So value = 4,00,000 + 15,000 = Rs 4,15,000. The relationship of the parties does not matter.

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