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CA Intermediate · Taxation · Value of Supply

Sunrise Appliances Pvt Ltd, Pune, sells a washing machine to a dealer. The list price is Rs 40,000. A trade discount of Rs 4,000 is shown on the invoice and was agreed before the supply. Packing charges of Rs 1,000 are charged separately. Both are in the invoice. GST is to be charged at 18%, and there are no other charges. What is the value of supply under section 15 of the CGST Act?

The value of supply is Rs 37,000. The invoice-shown discount agreed before supply is deducted from Rs 40,000 to give Rs 36,000, and the packing charges of Rs 1,000 charged by the supplier are added, since incidental expenses form part of the value.

  1. ARs 36,000
  2. BRs 37,000Correct
  3. CRs 40,000
  4. DRs 41,000

Explanation

Discount given before or at the time of supply and shown on the invoice is excluded: 40,000 - 4,000 = 36,000. Packing charges billed by the supplier are included: 36,000 + 1,000 = 37,000. Rs 41,000 wrongly ignores the discount, and Rs 36,000 omits the packing charges.

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