Skip to content

CA Intermediate · Taxation · Value of Supply

Sharma Traders, Jaipur, sells a machine to Verma Engineering, Delhi, for a price of Rs 2,00,000 (excluding GST). Sharma Traders also separately charges Rs 8,000 for packing and Rs 12,000 for freight to Verma's premises, both being incurred before delivery and charged on the same invoice. Nothing else is charged. What is the value of supply under Section 15 of the CGST Act?

The value of supply is Rs 2,20,000. Incidental expenses like packing and freight charged by the supplier to the recipient form part of the value of supply, so they are added to the Rs 2,00,000 price: 2,00,000 + 8,000 + 12,000.

  1. ARs 2,00,000
  2. BRs 2,08,000
  3. CRs 2,12,000
  4. DRs 2,20,000Correct

Explanation

Value of supply includes incidental expenses such as packing and freight charged by the supplier. Value = 2,00,000 + 8,000 + 12,000 = Rs 2,20,000. Rs 2,08,000 omits freight and Rs 2,12,000 omits packing, both of which are includible.

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