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CA Final · Indirect Tax Laws · Value of Supply

Sunrise Textiles Pvt Ltd, Surat, sells fabric to Kiran Garments for Rs 2,00,000 under an invoice. Sunrise separately charges Rs 6,000 for packing, and Rs 4,000 as freight arranged by it before delivery, both shown in the invoice. It also charges Rs 3,000 as interest for delayed payment received later. Ignoring GST, what is the value of supply of fabric under section 15?

The value is Rs 2,13,000. Packing and pre-delivery freight charged by the supplier are incidental expenses included under section 15(2)(c), and interest on delayed payment is included under section 15(2)(d). Adding 6,000, 4,000 and 3,000 to the price of 2,00,000 gives the transaction value.

  1. ARs 2,10,000
  2. BRs 2,13,000Correct
  3. CRs 2,00,000
  4. DRs 2,06,000

Explanation

Under section 15(2)(c), incidental expenses such as packing and amounts charged for anything done by the supplier at or before delivery are included, so packing 6,000 and freight 4,000 are added. Under section 15(2)(d), interest for delayed payment is also included. Value = 2,00,000 + 6,000 + 4,000 + 3,000 = 2,13,000. Rs 2,10,000 wrongly leaves out the interest.

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