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CA Intermediate · Taxation · Value of Supply

Kapoor Electronics sells a television with a list price of Rs 50,000. A discount of Rs 4,000 is shown on the invoice. Another post-supply discount of Rs 2,000 was given under a pre-agreed scheme, linked to the original invoice, and the recipient reversed the proportionate ITC. The supplier issued a credit note under section 34 before the due date. What is the adjusted taxable value after considering both discounts?

The adjusted taxable value is Rs 44,000. The invoice discount of Rs 4,000 is deductible, and the post-supply discount of Rs 2,000 is also deductible because it was agreed before supply, linked to the invoice, and ITC was reversed by the recipient. So 50,000 less 6,000 equals Rs 44,000.

  1. ARs 50,000
  2. BRs 46,000
  3. CRs 44,000Correct
  4. DRs 48,000

Explanation

A discount recorded on the invoice at the time of supply is deducted (Rs 4,000). A post-supply discount is excludible if established in an agreement before supply, specifically linked to invoices, and ITC is reversed by the recipient. All conditions are met, so Rs 2,000 is also excluded. Value = 50,000 - 4,000 - 2,000 = Rs 44,000.

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