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CA Intermediate · Taxation · Value of Supply

Kaveri Appliances, Chennai, sold a refrigerator to a customer for Rs 50,000 (excluding GST). Under a pre-announced scheme, the manufacturer Cool India Ltd. reimburses Kaveri Rs 3,000 per unit on each sale, and this is a subsidy directly linked to the price, received from a non-Government person. Kaveri's own price of Rs 50,000 was charged to the customer. What is the value of supply by Kaveri to the customer?

The value is Rs 53,000. A subsidy directly linked to the price of a supply is included in the transaction value unless it comes from the Central or State Government. Since Cool India Ltd. is a private party, its Rs 3,000 is added to Rs 50,000.

  1. ARs 50,000
  2. BRs 47,000
  3. CRs 53,000Correct
  4. DRs 3,000

Explanation

Subsidies directly linked to the price of the supply, other than those given by the Central or State Government, are included in value. So 50,000 + 3,000 = 53,000. Rs 47,000 wrongly deducts the subsidy.

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