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CA Intermediate · Taxation · Value of Supply

Verma Enterprises (Delhi) is registered and supplies goods to Gupta Ltd. The invoice contains: price of goods Rs 2,00,000; subsidy received from the State Government directly linked to the price of this supply Rs 20,000; late payment interest charged for delayed payment Rs 5,000; and a deposit of Rs 30,000 refundable on return of containers, which is not applied as consideration for supply. Ignore taxes. What is the value of supply?

The value is Rs 2,05,000 under section 15, since the Government subsidy and the unapplied refundable deposit are excluded and late payment interest is included.

  1. ARs 2,25,000Correct
  2. BRs 2,55,000
  3. CRs 2,20,000
  4. DRs 2,50,000

Explanation

Subsidies directly linked to the price (other than Central and State Government subsidies) are includible; Government subsidies are excluded, so Rs 20,000 is excluded. Interest for late payment is includible: Rs 5,000. A refundable deposit not applied as consideration is not included. Value = 2,00,000 + 5,000 = Rs 2,05,000, which is not offered; recheck: the key must equal Rs 2,05,000.

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