Skip to content

CA Intermediate · Taxation · Value of Supply

Mehta Ltd. (Mumbai) supplies machinery to Rao Ltd. (Pune) for Rs 5,00,000. Mehta Ltd. also charges Rs 30,000 as interest for delayed payment of the price, and Rs 20,000 as a subsidy received from a State Government directly linked to this supply price. Ignoring GST itself, what is the value of supply under Section 15?

The value is Rs 5,30,000. Interest on delayed payment is included in the value of supply, but subsidies given by the Central or State Governments are excluded. So only the Rs 30,000 interest is added to the Rs 5,00,000 price.

  1. ARs 5,50,000Correct
  2. BRs 5,30,000
  3. CRs 5,00,000
  4. DRs 5,20,000

Explanation

Interest or late fee for delayed payment of consideration is included in the value of supply. Subsidies linked to the supply price, other than those given by the Central and State Governments, are included; subsidies from the Central and State Governments are excluded. Here the subsidy is from the State Government, so it is excluded. Value = 5,00,000 + 30,000 = Rs 5,30,000.

Did you get it right without looking?

One question tells you little. A timed set on Value of Supply shows your real accuracy, how long you take and where you lose marks.

Practise Value of SupplyFree diagnostic mock

More Value of Supply questions