Skip to content

CA Intermediate · Taxation · Value of Supply

Sharma Traders, Jaipur, sells goods to Mehta Stores, Jaipur, at a price of Rs 80,000 (excluding taxes). Sharma Traders also charges Rs 4,000 for packing, which is not separately priced elsewhere, and Rs 6,000 as freight for delivery on a CIF-like basis, with the goods supplied together as one supply. Assume the supplier and recipient are unrelated and price is the sole consideration. What is the value of supply under section 15 of the CGST Act, 2017, before GST?

The value of supply is Rs 90,000. Under section 15, incidental expenses charged by the supplier, such as packing and freight, form part of the transaction value, so they are added to the price of Rs 80,000 to give Rs 90,000 before GST.

  1. ARs 80,000
  2. BRs 84,000
  3. CRs 90,000Correct
  4. DRs 86,000

Explanation

Incidental expenses such as packing and freight charged by the supplier to the recipient are included in value of supply. So 80,000 + 4,000 + 6,000 = 90,000. Rs 84,000 omits freight and Rs 86,000 omits 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