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

Sharma Traders Pvt Ltd sells machinery to an unrelated buyer for Rs 5,00,000 and separately charges Rs 20,000 as State-levied cess under a non-GST law on the invoice. Ignoring GST, what is the value of supply under Section 15 of the CGST Act, 2017?

The value of supply is Rs 5,20,000. Section 15(2)(a) adds to the transaction value any taxes, duties, cesses or fees levied under laws other than GST laws when the supplier charges them separately, so the Rs 20,000 cess is included.

  1. ARs 5,00,000, because the cess is a tax and is always excluded
  2. BRs 5,20,000, because taxes levied under other laws and charged separately by the supplier are includedCorrect
  3. CRs 4,80,000, because the cess is deducted from the price
  4. DRs 5,10,000, because only half of such levies is included

Explanation

Section 15(2)(a) includes taxes, duties, cesses, fees and charges levied under any law other than the GST laws and the Compensation Act, if charged separately by the supplier. The cess is under another law, so it is added: 5,00,000 + 20,000 = 5,20,000. Excluding it ignores clause (a).

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