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CA Intermediate · Taxation · Value of Supply

Mehta Electronics (Mumbai) sells a laptop to a customer in Pune for a price of Rs 50,000 exclusive of taxes. Mehta also charges Rs 2,000 for packing and Rs 3,000 for transportation, both billed on the same invoice, and a Rs 1,500 discount is given as per an agreement entered before the supply and recorded in the invoice. GST is charged separately. What is the value of supply?

The value of supply is Rs 53,500. Packing and transport charged by the supplier are included in value, giving Rs 55,000, and the pre-agreed discount shown on the invoice of Rs 1,500 is then deducted.

  1. ARs 55,000
  2. BRs 53,500Correct
  3. CRs 51,500
  4. DRs 50,000

Explanation

Value = price 50,000 + packing 2,000 + transport 3,000 = 55,000 (incidental expenses charged by the supplier are includible). The discount of 1,500 given as per a prior agreement and shown on the invoice is deductible, giving 53,500. Rs 55,000 ignores the discount; Rs 50,000 omits incidental charges.

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