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

Meera Electricals supplies goods under an invoice at Rs 5,00,000. The invoice records a trade discount of Rs 20,000 given at the time of supply. Later, under an agreement made before the supply and linked to the invoices, Meera gives a further Rs 15,000 post-supply discount, but the recipient has not reversed the related input tax credit. Interest of Rs 5,000 is also charged for delayed payment. What is the value of supply?

The value of supply is Rs 4,85,000. The invoice-recorded discount of Rs 20,000 is deducted, the post-supply discount is not deducted because input tax credit was not reversed, and Rs 5,000 interest for delayed payment is added under Section 15(2)(d).

  1. ARs 4,70,000
  2. BRs 4,80,000
  3. CRs 4,85,000
  4. DRs 4,90,000Correct

Explanation

The Rs 20,000 discount recorded in the invoice is excluded under Section 15(3)(a). The post-supply discount fails Section 15(3)(b)(ii) because ITC was not reversed, so it is not deducted. Interest for delayed payment is included under 15(2)(d). Value = 5,00,000 - 20,000 + 5,000 = Rs 4,85,000. Check: option Rs 4,90,000 ignores... recomputed: 5,00,000 - 20,000 = 4,80,000; plus 5,000 = 4,85,000.

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