Skip to content

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

Rao Traders sold goods to Mehta Stores, an unrelated buyer, at an invoice price of ₹1,20,000 and the invoice shows no discount. Their agreement, made before the supply, states a 4% discount on this invoice if payment is made within 15 days, and it is linked to the invoice. Mehta paid in 10 days. Rao issued a credit note for the discount and Mehta reversed the attributable ITC. Packing charges of ₹2,000 were charged separately in the invoice. What is the value of supply after the discount for GST, treating packing as part of the supply?

The value is ₹1,17,200. The 4% discount of ₹4,800 meets all post-supply conditions and is excluded, while ₹2,000 packing charged by the supplier is included as an incidental expense. So 1,20,000 plus 2,000 minus 4,800 gives ₹1,17,200.

  1. A₹1,17,200Correct
  2. B₹1,20,000
  3. C₹1,15,200
  4. D₹1,22,000

Explanation

Discount = 4% of 1,20,000 = ₹4,800. Since the agreement predates the supply, is linked to the invoice and the ITC was reversed, it is excluded under Section 15(3)(b). Packing is an incidental expense included under Section 15(2)(c), and the question states the 1,20,000 price is separate from the ₹2,000 packing. Value = 1,20,000 + 2,000 - 4,800 = ₹1,17,200. Option ₹1,15,200 wrongly deducts the discount on the 1,22,000 and also removes packing.

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