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CA Final · Indirect Tax Laws · Value of Supply

Mehta Appliances sells a new washing machine to a customer for Rs 30,000 cash along with the exchange of the customer's old machine. The same new washing machine, sold without any exchange, is priced at Rs 36,000 and this is the price at which it is regularly sold. Applying rule 27 of the CGST Rules, the value of supply of the new machine is:

The value is Rs 36,000. Because part of the consideration is the old machine, rule 27(a) applies and the open market value of the new machine, which is its price without exchange, is taken as the value of supply.

  1. ARs 30,000
  2. BRs 36,000Correct
  3. CRs 33,000
  4. DRs 66,000

Explanation

Consideration is not wholly in money because an old machine is taken in exchange. Rule 27(a) makes the open market value the value of supply, and the open market price without exchange is Rs 36,000, as in the rule's phone illustration. Rs 30,000 ignores the non-monetary part of the consideration.

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