Valuation of Supply under Goods and Services Tax

By Registrationwala

3rd May 2017


Goods and service tax or GST will be one tax and subsume all taxes. It will bring "One country one tax" administration.

Being a totally new type of aberrant taxation there are many inquiries in the psyches of the associations. A standout amongst the most critical question is what is valuation of supply under GST? Under GST regime, valuation depends on the transaction as in the past laws. In case, if there is an occurrence of transaction value not getting acknowledged then we need to allude the principles for the right valuation.

Current regime

Currently taxes are calculated on the value of goods/services-


Value of goods/services


Transaction value of goods or MRP


Sale Value

Service tax

Taxable value of service rendered

The Valuation of Supply under GST

GST will be imposed on the 'transaction value'. Transaction value is the cost actually paid (or payable) for the supply of merchandise/administrations between un-related gatherings (i.e., cost is the sole thought)

The estimation of supply under GST should include:

  • Any taxes, obligations, cess, expenses and charges levied under any act, with the exception of GST. GST Compensation Cess will be avoided if charged independently by the provider.
  • Any sum that the provider is subject to pay which has been brought about by the beneficiary is excluded in the cost.
  • The value will incorporate all coincidental costs in connection to deal, for example, packing, commission and so forth.
  • Subsidies related to supply, with the exception of Government subsidies will be incorporated.
  • Interest/late fee/penalty for postponed instalment of consideration will be incorporated.

For Instance

Let's contemplate a case of ABC, a maker, offering devices and equipment like drills, polishers, spades and so forth. It sells a power drill to XYZ a distributer. The MRP is Rs. 5,500 however ABC offers it for Rs. 3,000.

Presently, the invoice will look like

Power Drill


Add: Excise @ 12.5%




Add: VAT @14.5% (on subtotal)




Value of supply under GST

The estimation of merchandise and/or administrations provided is the transaction value, i.e. the cost paid/payable, which is Rs 3,000 in the instance. Expecting CGST=9% and SGST= 9%

Power Drill


Add: CGST @9%


Add: SGST @9%





Rebates will be dealt differently under GST. Rebates given previously or at the time of supply will be permitted as deduction from transaction value. Rebates given after supply will be permitted just if certain specifications are fulfilled.


Valuation of Supply under Goods and Services Tax