CMA Final · Indirect Tax Laws and Practice · Valuation under GST
Under Rule 31D of the CGST Rules, 2017, the value of supply of specified goods such as pan masala is deemed to be:
The value is the declared retail sale price minus the amount of applicable tax. The RSP is a tax-inclusive maximum price, so the tax content is removed using the prescribed formula to arrive at the deemed value of supply for the specified goods.
- AThe transaction value excluding all taxes
- BThe retail sale price declared on the goods, less the amount of applicable taxCorrect
- CThe retail sale price declared on the goods, including all taxes
- DThe cost of production plus 10% profit margin
Explanation
Rule 31D deems the value of specified goods (for example pan masala and cigarettes) to be the declared retail sale price less the applicable tax. The tax is carved out of the RSP, which includes taxes. Taking the RSP with taxes included as the value would overstate it.
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