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CA Intermediate · Taxation · Value of Supply

Kaveri Traders, Chennai, supplies goods to Mohan Ltd. Invoice price is Rs 2,00,000 (excluding taxes). Mohan Ltd. is to pay by 30 days. The contract says that interest at 2% of the invoice price will be charged on late payment. Mohan Ltd. pays after a delay and Kaveri charges Rs 4,000 as late payment interest. Under section 15 of the CGST Act, what is the value of supply on this transaction (excluding GST)?

The value is Rs 2,04,000. Interest, late fee or penalty charged for delayed payment of consideration is specifically included in the value of supply, so the Rs 4,000 late payment interest is added to the invoice price of Rs 2,00,000.

  1. ARs 2,00,000
  2. BRs 2,04,000Correct
  3. CRs 1,96,000
  4. DRs 2,02,000

Explanation

Interest or late fee for delayed payment of consideration is included in the value of supply under section 15(2)(d). Value = 2,00,000 + 4,000 = 2,04,000. Rs 2,00,000 ignores the inclusion, and Rs 1,96,000 wrongly subtracts it.

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