Valuation of Supply under GST – When Consideration is Not Wholly in Money

By Registrationwala

2nd May 2017

 

According to the GST Law, if the remuneration of supply is halfway in cash and relatively otherwise, GST valuation fiat needs to be prescribed.

Cases where Consideration is Not Wholly in Money

Organizations work in a dynamic model and we have seen inventive plans wherein a purchaser is required to reimburse the halfway sum in cash and the rest in kind, for example, when trading utilized merchandise for a new product.

As a general rule, estimation of supply will be the measure of consideration received in cash from the purchaser. But, there can be situations when halfway remuneration is in cash and the rest` is in kind. In such situation, the estimation of supply should be:

  • Open Market Value of such supply. OMV will be the sum which is adequately accessible in open market.
  • In the event that the open market value is not accessible, the estimation of supply will be the entirety of the aggregate of consideration in cash and any such further sum in cash as is proportional to the thought not in cash if such sum is known at the time of supply. In straightforward words the monetary estimation of partial consideration will be added to fiscal thought, to sum up to total consideration.
  • In the event that the esteem is not definite under the clauses above, the estimation of supply of products or administration or both will be identical to that of like kind and quantity. Here the taxable individual can allude to similar goods or benefits or both for deciding the estimation of supply.
  • On the off chance that the esteem is not definite under all the above clauses, the esteem should be the whole of consideration in cash and such further amount of cash that is equal to consideration not in cash as decided on the premise of Cost Method or Residual Method.

For Instance

  • Where a brand new TV is provided for Rs. 20,000 alongside the trading of an old TV and if the cost of the new TV without trade is Rs. 24,000 the open market estimation of the new TV is Rs. 24,000.
  •  Where a laptop is provided for Rs. 40,000 alongside a trade of printer that is produced by the beneficiary and the estimation of the printer known at the time of supply is Rs. 4,000 however the open market estimation of the laptop is not known, the estimation of the supply of tablet is Rs. 44,000.

 

 

Valuation of Supply under GST – When Consideration is Not Wholly in Money

2017-05-02