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CA Final · Indirect Tax Laws · Value of Supply

Sundaram Textiles Ltd, Coimbatore, sells fabric to Kaveri Garments Pvt Ltd for Rs 2,00,000 (excluding GST). Sundaram also charges separately Rs 6,000 for packing and Rs 4,000 for insurance incurred at the time of delivery. Both are charged to the recipient by the supplier. Ignoring GST, what is the value of supply?

The value of supply is Rs 2,10,000. Packing and other amounts charged by the supplier for things done at or before delivery, such as insurance, are included in the transaction value under section 15(2)(c), so both Rs 6,000 and Rs 4,000 are added to the Rs 2,00,000 price.

  1. ARs 2,00,000
  2. BRs 2,06,000
  3. CRs 2,04,000
  4. DRs 2,10,000Correct

Explanation

Under section 15(2)(c), incidental expenses including packing, and any amount charged for anything done by the supplier in respect of the supply at or before delivery, form part of value. Insurance charged by the supplier is likewise included. Value = 2,00,000 + 6,000 + 4,000 = Rs 2,10,000. Rs 2,06,000 wrongly leaves out the insurance.

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