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

Kaveri Foods Ltd supplies goods to an unrelated dealer at a price of Rs 2,00,000. The supplier is liable to pay Rs 15,000 of transport insurance for this supply, but the recipient paid it directly and it is not included in the price. What is the value of supply?

The value of supply is Rs 2,15,000. Under Section 15(2)(b), an amount that the supplier was liable to pay for the supply but which the recipient incurred, and which is not in the price, is added to the transaction value.

  1. ARs 2,00,000, because the recipient bore the cost
  2. BRs 1,85,000, because the amount is deducted
  3. CRs 2,15,000, because an amount the supplier is liable to pay but the recipient incurred is addedCorrect
  4. DRs 2,07,500, because it is shared equally

Explanation

Section 15(2)(b) includes any amount the supplier is liable to pay in relation to the supply but which has been incurred by the recipient and not included in the price. Value = 2,00,000 + 15,000 = 2,15,000. Leaving it out would understate the value.

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