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CMA Intermediate · Direct and Indirect Taxation · Time and Value of Supply

Mehta Mobiles sells a new phone to a customer for ₹21,000 in cash along with the exchange of the customer's old phone. The price of the same new phone without exchange is ₹25,000. The old phone is valued at ₹4,000 in the exchange. What is the value of supply of the new phone under the CGST Rules, 2017?

The value is ₹25,000. Because the consideration is partly an old phone, the open market value of the supply is taken under Rule 27(a). The new phone sells for ₹25,000 without exchange, so the cash of ₹21,000 does not represent the value.

  1. A₹21,000
  2. B₹25,000Correct
  3. C₹29,000
  4. D₹17,000

Explanation

Where consideration is not wholly in money, the open market value of the supply is the value under Rule 27(a). The open market price of the new phone without exchange is ₹25,000, consistent with the rule's illustration. Adding ₹4,000 to the cash gives ₹25,000 as well, but ₹21,000 ignores the exchange.

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