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CMA Intermediate · Direct and Indirect Taxation · Time and Value of Supply

Sunrise Traders Pvt Ltd sells machinery to Meera Engineering for a price of Rs 5,00,000. In addition, Sunrise separately charges Rs 20,000 as packing charges and Rs 10,000 as excise-type duty levied under another law (not GST). Sunrise also allows a trade discount of Rs 15,000, duly recorded in the invoice. Excluding GST, the value of supply under section 15 is:

The value is Rs 5,15,000. Section 15 includes packing charges and duties under other laws charged separately, which add Rs 30,000 to the Rs 5,00,000 price. A discount recorded in the invoice at the time of supply is excluded, so Rs 15,000 is deducted.

  1. ARs 5,30,000
  2. BRs 5,15,000Correct
  3. CRs 5,05,000
  4. DRs 5,20,000

Explanation

Start with the price of Rs 5,00,000. Add packing of Rs 20,000 as an incidental expense charged by the supplier, and Rs 10,000 as duty under another law charged separately. This gives Rs 5,30,000. The discount of Rs 15,000 is recorded in the invoice and is excluded, so the value is Rs 5,15,000. Rs 5,30,000 wrongly ignores the discount.

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