CMA Intermediate · Direct and Indirect Taxation · Time and Value of Supply
Kaveri Tobacco Ltd supplies cigarettes whose package declares a maximum retail sale price (inclusive of all taxes) of Rs 11,800 per carton. Assume the only applicable tax is IGST at 18% on this valuation basis. Under Rule 31D, the value of supply per carton is:
The value is Rs 10,000 per carton. Rule 31D deems the value to be the retail sale price less tax, with tax computed as RSP times rate divided by 100 plus rate. Rs 11,800 x 18/118 gives Rs 1,800 tax, leaving Rs 10,000.
- ARs 11,800
- BRs 9,676
- CRs 10,000Correct
- DRs 9,664
Explanation
Tax amount = RSP x rate / (100 + rate) = 11,800 x 18/118 = Rs 1,800. Value = 11,800 - 1,800 = Rs 10,000. Rs 9,676 results from deducting 18% of the RSP (Rs 2,124) instead of the tax-inclusive fraction.
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