Section 15 of CGST Act, 2017 – Value of taxable supply

The Central Goods and Services Tax Act, 2017

Chapter-IV Time and Value of Supply

Section 15: Value of taxable supply.

15. (1) The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply.

(2) The value of supply shall include^c1 –

(a) any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than this Act, the State Goods and Services Tax Act, the Union Territory Goods and Services Tax Act and the Goods and Services Tax (Compensation to States) Act, if charged separately by the supplier;

(b) any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included^c2 in the price actually paid or payable for the goods or services or both;

(c) incidental expenses, including commission and packing, charged by the supplier to the recipient of a supply and any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the time of, or before delivery of goods or supply of services;

(d) interest or late fee or penalty for delayed payment of any consideration for any supply;^c3 and

(e) subsidies directly linked to the price excluding subsidies provided by the Central Government ¹[and the State] Governments.

Explanation.–For the purposes of this sub-section, the amount of subsidy shall be included in the value of supply of the supplier who receives the subsidy.

(3) The value of the supply shall not include any discount^c4 which is given–

(a) before or at the time of the supply if such discount^c5 has been duly recorded in the invoice issued in respect of such supply; and

(b) after the supply^c6 has been effected, if—

(i) such discount is established in terms of an agreement entered into at or before the time of such supply and specifically linked to relevant invoices; and

(ii) input tax credit as is attributable to the discount on the basis of document issued by the supplier has been reversed by the recipient of the supply.

(4) Where the value of the supply of goods or services or both cannot be determined under sub-section (1), the same shall be determined in such manner as may be prescribed.

(5) Notwithstanding anything contained in sub-section (1) or sub-section (4), the value of such supplies as may be notifiedⁿ¹ by the Government on the recommendations of the Council shall be determined in such manner as may be prescribed.

Explanation.—For the purposes of this Act,–

(a) persons shall be deemed to be “related persons” if–

(i) such persons are officers or directors of one another’s businesses;^c7

(ii) such persons are legally recognised partners in business;

(iii) such persons are employer and employee;

(iv) any person directly or indirectly owns, controls or holds twenty-five per cent. or more of the outstanding voting stock or shares of both of them;

(v) one of them directly or indirectly controls the other;

(vi) both of them are directly or indirectly controlled by a third person;

(vii) together they directly or indirectly control a third person; or

(viii) they are members of the same family;

(b) the term “person” also includes legal persons;

(c) persons who are associated in the business of one another in that one is the sole agent or sole distributor or sole concessionaire, howsoever described, of the other, shall be deemed to be related.

References

Enforcement:

Enforced w.e.f. July 01, 2017 [Notification No. G.S.R. 658(E) dated 28.06.2017].

Amendments:

1. Corrected by Corrigendum with the Indian Institutes of Information Technology (Public-Private Partnership) Act, 2017, dated 09.08.2017, for the words “and State”.

Notifications:

n1. Notified supplies as (i) supply of online money gaming; (ii) supply of online gaming, other than online money gaming; and (iii) supply of actionable claims in casinos.[Notification No. 49/2023 – Central Tax dated 29.09.2023]

Circulars:

c1. For the purpose of determination of value of supply under GST, Tax collected at source (TCS) under the provisions of the Income Tax Act, 1961 would not be includible as it is an interim levy not having the character of tax. [Circular No. 76/50/2018-GST dated 31.12.2018]

c2. While calculating the value of the supply made by the component manufacturer, the value of moulds and dies provided by the OEM to the component manufacturer on FOC basis shall not be added to the value of such supply. [Circular No. 47/21/2018-GST dated 08.06.2018]

c3. The value of the interest charged for credit would be required to be included in the value of supply of goods by del-credere agent (DCA) to the recipient as per Section 15(2)(d) of the CGST Act. [Circular No. 73/47/2018-GST dated 05.11.2018]

c4. Discounts offered by the suppliers to customers (including staggered discount under ‘Buy more, save more’ scheme and post supply / volume discounts established before or at the time of supply) shall be excluded to determine the value of supply provided they satisfy the parameters laid down in Section 15(3) of the CGST Act, including the reversal of ITC by the recipient of the supply as is attributable to the discount on the basis of document (s) issued by the supplier. [Circular No. 92/11/2019-GST dated 07.03.2019]

c5. Where the deduction on account of No claim bonus is provided in the invoice issued by the insurer to the insured, GST shall be leviable on actual insurance premium amount, payable by the policy holders to the insurer, after deduction of No Claim Bonus mentioned on the invoice. [Circular No. 186/18/2022-GST dated 27.12.2022]

c6. Secondary discounts shall not be excluded while determining the value of supply as such discounts are not known at the time of supply and the conditions laid down in Section 15(3)(b) of the CGST Act are not satisfied. [Circular No. 92/11/2019-GST dated 07.03.2019]. Mechanism for providing evidence of compliance of conditions of Section 15(3)(b)(ii) of the CGST Act, 2017 by the suppliers. [Circular No. 212/6/2024-GST dated 26.06.2024]

c7. Director’s Personal Guarantee: The activity of providing personal guarantee by the Director to the banks/ financial institutions for securing credit facilities for their companies is to be treated as a supply of service, even when made without consideration. However, as per RBI, no consideration can be paid to the director by the company. Hence, the open market value of the said transaction/supply may be treated as zero. In such a scenario, no tax is payable on such supply of service by the director to the company. In cases where the director, who had provided the guarantee, is no longer connected with the management but continuance of his guarantee, the taxable value of such supply of service shall be the remuneration/ consideration provided to such a person/ guarantor by the company, directly or indirectly. [Circular No. 204/16/2023-GST dated 27.10.2023]

c8. Clarification regarding taxability of services provided by an office of an organisation in one State to the office of that organisation in another State, both being distinct persons (Head Office (HO) and Branch Offices (BOs). [Circular No. 199/11/2023-GST dated 17.07.2023]

c9. For Fully electronic refund process through FORM GST RFD-01 and single disbursement, refer Circular No. 125/44/2019-GST dated 18.11.2019.