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

Meera Industries supplies machines to Kiran Ltd. at ₹2,00,000 per the invoice. The supplier is liable to pay ₹10,000 of transit insurance for this supply, but Kiran Ltd. paid it directly to the insurer and it is not included in the invoice price. Under Section 15, what is the value of supply, ignoring GST?

The value is ₹2,10,000. Section 15(2)(b) adds any amount the supplier is liable to pay for the supply that the recipient incurred and that is not in the price, so the ₹10,000 insurance is included along with the ₹2,00,000 invoice price.

  1. A₹2,00,000, since the supplier did not incur the expense
  2. B₹2,10,000, since an amount the supplier is liable to pay but incurred by the recipient is includedCorrect
  3. C₹1,90,000, since the recipient's payment reduces the price
  4. D₹2,05,000, since only half is includible

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 + 10,000 = ₹2,10,000. Leaving it out ignores this clause.

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