CMA Final · Indirect Tax Laws and Practice · Valuation under GST
Sharma Tobacco Ltd supplies cigarettes whose declared RSP is Rs 1,180 per pack, inclusive of all taxes. Assume the applicable tax rate under Rule 31D(2) is a sum of 18% (the only applicable tax rate). Using the formula in Rule 31D(2), the value of supply per pack is:
Tax is computed as RSP times the rate divided by 100 plus the rate, which is 1,180 x 18/118 = Rs 180. Deducting this from the RSP of Rs 1,180 gives a value of supply of Rs 1,000 per pack.
- ARs 1,000Correct
- BRs 1,180
- CRs 1,159
- DRs 967
Explanation
Tax amount = 1,180 x 18 / (100+18) = Rs 180. Value = 1,180 - 180 = Rs 1,000. Rs 967 results from wrongly deducting 18% of RSP (Rs 212.40) as tax, giving about Rs 967.60.
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