Determination of Value of Supply Rules under CGST Rules 2017

 

1. Val­ue of sup­ply of goods or ser­vices where the con­sid­er­a­tion is not whol­ly in — Where the sup­ply of goods or ser­vices is for a con­sid­er­a­tion not whol­ly in mon­ey, the val­ue of the sup­ply shall,-

• be the open mar­ket val­ue of such supply;
• if the open mar­ket val­ue is not avail­able under clause (a), be the sum total of con­sid­er­a­tion in mon­ey and any such fur­ther amount in mon­ey as is equiv­a­lent to the con­sid­er­a­tion not in mon­ey, if such amount is known at the time of supply;
• if the val­ue of sup­ply is not deter­minable under clause (a) or clause (b), be the val­ue of sup­ply of goods or ser­vices or both of like kind and quality;
• if the val­ue is not deter­minable under clause (a) or clause (b) or clause ©, be the sum total of con­sid­er­a­tion in mon­ey and such fur­ther amount in mon­ey that is equiv­a­lent to con­sid­er­a­tion not in mon­ey as deter­mined by the appli­ca­tion of rule 30 or rule 31 in that

Illus­tra­tion:

• Where a new phone is sup­plied for twen­ty thou­sand rupees along with the exchange of an old phone and if the price of the new phone with­out exchange is twen­ty four thou­sand rupees, the open mar­ket val­ue of the new phone is twen­ty four thou­sand rupees.
• Where a lap­top is sup­plied for forty thou­sand rupees along with the barter of a print­er that is man­u­fac­tured by the recip­i­ent and the val­ue of the print­er known at the time of sup­ply is four thou­sand rupees but the open mar­ket val­ue of the lap­top is not known, the val­ue of the sup­ply of the lap­top is forty four thousand 

 

 

2. Val­ue of sup­ply of goods or ser­vices or both between dis­tinct or relat­ed per­sons, oth­er than through an -The val­ue of the sup­ply of goods or ser­vices or both between dis­tinct per­sons as spec­i­fied in sub-sec­tion (4) and (5) of sec­tion 25 or where the sup­pli­er and recip­i­ent are relat­ed, oth­er than where the sup­ply is made through an agent, shall- 
   • be the open mar­ket val­ue of such supply;
   • if the open mar­ket val­ue is not avail­able, be the val­ue of sup­ply of goods or ser­vices of like kind and quality;
   • if the val­ue is not deter­minable under clause (a) or (b), be the val­ue as deter­mined by the appli­ca­tion of rule 30 or rule 31, in that order:

Pro­vid­ed that where the goods are intend­ed for fur­ther sup­ply as such by the recip­i­ent, the val­ue shall, at the option of the sup­pli­er, be an amount equiv­a­lent to nine­ty per­cent of the price charged for the sup­ply of goods of like kind and qual­i­ty by the recip­i­ent to his cus­tomer not being a relat­ed person:

Pro­vid­ed fur­ther that where the recip­i­ent is eli­gi­ble for full input tax cred­it, the val­ue declared in the invoice shall be deemed to be the open mar­ket val­ue of the goods or services.

 

3. Val­ue of sup­ply of goods made or received through an agent.-The val­ue of sup­ply of goods between the prin­ci­pal and his agent shall- 
   • be the open mar­ket val­ue of the goods being sup­plied, or at the option of the sup­pli­er, be nine­ty per of the price charged for the sup­ply of goods of like kind and qual­i­ty by the recip­i­ent to his cus­tomer not being a relat­ed per­son, where the goods are intend­ed for fur­ther sup­ply by the said recipient.

Illus­tra­tion: A prin­ci­pal sup­plies ground­nut to his agent and the agent is sup­ply­ing ground­nuts of like kind and qual­i­ty in sub­se­quent sup­plies at a price of five thou­sand rupees per quin­tal on the day of the sup­ply. Anoth­er inde­pen­dent sup­pli­er is sup­ply­ing ground­nuts of like kind and qual­i­ty to the said agent at the price of four thou­sand five hun­dred and fifty rupees per quin­tal. The val­ue of the sup­ply made by the prin­ci­pal shall be four thou­sand five hun­dred and fifty rupees per quin­tal or where he exer­cis­es the option, the val­ue shall be 90 per cent. of five thou­sand rupees i.e., four thou­sand five hun­dred rupees per quintal.

• where the val­ue of a sup­ply is not deter­minable under clause (a), the same shall be deter­mined by the appli­ca­tion of rule 30 or rule 31 in that

 

 

4. Val­ue of sup­ply of goods or ser­vices or both based on -Where the val­ue of a sup­ply of goods or ser­vices or both is not deter­minable by any of the pre­ced­ing rules of this Chap­ter, the val­ue shall be one hun­dred and ten per­cent of the cost of pro­duc­tion or man­u­fac­ture or the cost of acqui­si­tion of such goods or the cost of pro­vi­sion of such services.

 

 

5. Resid­ual method for deter­mi­na­tion of val­ue of sup­ply of goods or ser­vices or both.- Where the val­ue of sup­ply of goods or ser­vices or both can­not be deter­mined under rules 27 to 30, the same shall be deter­mined using rea­son­able means con­sis­tent with the prin­ci­ples and the gen­er­al pro­vi­sions of sec­tion 15 and the pro­vi­sions of this Chapter:

Pro­vid­ed that in the case of sup­ply of ser­vices, the sup­pli­er may opt for this rule, ignor­ing rule 30.

 

 

6. Deter­mi­na­tion of val­ue in respect of cer­tain sup­plies.- (1) Notwith­stand­ing any­thing con­tained in the pro­vi­sions of this Chap­ter, the val­ue in respect of sup­plies spec­i­fied below shall, at the option of the sup­pli­er, be deter­mined in the man­ner provided

• The val­ue of sup­ply of ser­vices in rela­tion to the pur­chase or sale of for­eign cur­ren­cy, includ­ing mon­ey chang­ing, shall be deter­mined by the sup­pli­er of ser­vices in the fol­low­ing man­ner, namely:- 
  • for a cur­ren­cy, when exchanged from, or to, Indi­an Rupees, the val­ue shall be equal to the dif­fer­ence in the buy­ing rate or the sell­ing rate, as the case may be, and the Reserve Bank of India ref­er­ence rate for that cur­ren­cy at that time, mul­ti­plied by the total units of currency:

 

Pro­vid­ed that in case where the Reserve Bank of India ref­er­ence rate for a cur­ren­cy is not avail­able, the val­ue shall be one per cent. of the gross amount of Indi­an Rupees pro­vid­ed or received by the per­son chang­ing the money:

Pro­vid­ed fur­ther that in case where nei­ther of the cur­ren­cies exchanged is Indi­an Rupees, the val­ue shall be equal to one per cent. of the less­er of the two amounts the per­son chang­ing the mon­ey would have received by con­vert­ing any of the two cur­ren­cies into Indi­an Rupee on that day at the ref­er­ence rate pro­vid­ed by the Reserve Bank of India.

Pro­vid­ed also that a per­son sup­ply­ing the ser­vices may exer­cise the option to ascer­tain the val­ue in terms of clause (b) for a finan­cial year and such option shall not be with­drawn dur­ing the remain­ing part of that finan­cial year.

• at the option of the sup­pli­er of ser­vices, the val­ue in rela­tion to the sup­ply of for­eign cur­ren­cy, includ­ing mon­ey chang­ing, shall be deemed to be- 
  • one per cent. of the gross amount of cur­ren­cy exchanged for an amount up to one lakh rupees, sub­ject to a min­i­mum amount of two hun­dred and fifty rupees;
  • one thou­sand rupees and half of a per cent. of the gross amount of cur­ren­cy exchanged for an amount exceed­ing one lakh rupees and up to ten lakh rupees; and
  • five thou­sand and five hun­dred rupees and one tenth of a per cent. of the gross amount of cur­ren­cy exchanged for an amount exceed­ing ten lakh rupees, sub­ject to a max­i­mum amount of six­ty thousand
• The val­ue of the sup­ply of ser­vices in rela­tion to book­ing of tick­ets for trav­el by air pro­vid­ed by an air trav­el agent shall be deemed to be an amount cal­cu­lat­ed at the rate of five per cent. of the basic fare in the case of domes­tic book­ings, and at the rate of ten per cent. of the basic fare in the case of inter­na­tion­al book­ings of pas­sage for trav­el by

Expla­na­tion.- For the pur­pos­es of this sub-rule, the expres­sion “basic fare” means that part of the air fare on which com­mis­sion is nor­mal­ly paid to the air trav­el agent by the airlines.

• The val­ue of sup­ply of ser­vices in rela­tion to life insur­ance busi­ness shall be,- 
  • the gross pre­mi­um charged from a pol­i­cy hold­er reduced by the amount allo­cat­ed for invest­ment, or sav­ings on behalf of the pol­i­cy hold­er, if such an amount is inti­mat­ed to the pol­i­cy hold­er at the time of sup­ply of service;
  • in case of sin­gle pre­mi­um annu­ity poli­cies oth­er than (a), ten per cent. of sin­gle pre­mi­um charged from the pol­i­cy hold­er; or
  • in all oth­er cas­es, twen­ty five per cent. of the pre­mi­um charged from the pol­i­cy hold­er in the first year and twelve and a half per cent. of the pre­mi­um charged from the pol­i­cy hold­er in sub­se­quent years:

Pro­vid­ed that noth­ing con­tained in this sub-rule shall apply where the entire pre­mi­um paid by the pol­i­cy hold­er is only towards the risk cov­er in life insurance.

• Where a tax­able sup­ply is pro­vid­ed by a per­son deal­ing in buy­ing and sell­ing of sec­ond hand goods e., used goods as such or after such minor pro­cess­ing which does not change the

 

nature of the goods and where no input tax cred­it has been availed on the pur­chase of such goods, the val­ue of sup­ply shall be the dif­fer­ence between the sell­ing price and the pur­chase price and where the val­ue of such sup­ply is neg­a­tive, it shall be ignored:

Pro­vid­ed that the pur­chase val­ue of goods repos­sessed from a default­ing bor­row­er, who is not reg­is­tered, for the pur­pose of recov­ery of a loan or debt shall be deemed to be the pur­chase price of such goods by the default­ing bor­row­er reduced by five per­cent­age points for every quar­ter or part there­of, between the date of pur­chase and the date of dis­pos­al by the per­son mak­ing such repossession.

• The val­ue of a token, or a vouch­er, or a coupon, or a stamp (oth­er than postage stamp) which is redeemable against a sup­ply of goods or ser­vices or both shall be equal to the mon­ey val­ue of the goods or ser­vices or both redeemable against such token, vouch­er, coupon, or stamp.
• The val­ue of tax­able ser­vices pro­vid­ed by such class of ser­vice providers as may be noti­fied by the Gov­ern­ment, on the rec­om­men­da­tions of the Coun­cil, as referred to in para­graph 2 of Sched­ule I of the said Act between dis­tinct per­sons as referred to in sec­tion 25, where input tax cred­it is avail­able, shall be deemed to be

7. Val­ue of sup­ply of ser­vices in case of pure — Notwith­stand­ing any­thing con­tained in the pro­vi­sions of this Chap­ter, the expen­di­ture or costs incurred by a sup­pli­er as a pure agent of the recip­i­ent of sup­ply shall be exclud­ed from the val­ue of sup­ply, if all the fol­low­ing con­di­tions are sat­is­fied, namely,-

• the sup­pli­er acts as a pure agent of the recip­i­ent of the sup­ply, when he makes the pay­ment to the third par­ty on autho­ri­sa­tion by such recipient;
• the pay­ment made by the pure agent on behalf of the recip­i­ent of sup­ply has been sep­a­rate­ly indi­cat­ed in the invoice issued by the pure agent to the recip­i­ent of ser­vice; and
• the sup­plies pro­cured by the pure agent from the third par­ty as a pure agent of the recip­i­ent of sup­ply are in addi­tion to the ser­vices he sup­plies on his own

Expla­na­tion.- For the pur­pos­es of this rule, the expres­sion “pure agent” means a per­son who-

• enters into a con­trac­tu­al agree­ment with the recip­i­ent of sup­ply to act as his pure agent to incur expen­di­ture or costs in the course of sup­ply of goods or ser­vices or both;
• nei­ther intends to hold nor holds any title to the goods or ser­vices or both so pro­cured or sup­plied as pure agent of the recip­i­ent of supply;
• does not use for his own inter­est such goods or ser­vices so pro­cured; and
• receives only the actu­al amount incurred to pro­cure such goods or ser­vices in addi­tion to the amount received for sup­ply he pro­vides on his own

 

Illus­tra­tion.- Cor­po­rate ser­vices firm A is engaged to han­dle the legal work per­tain­ing to the incor­po­ra­tion of Com­pa­ny B. Oth­er than its ser­vice fees, A also recov­ers from B, reg­is­tra­tion fee and approval fee for the name of the com­pa­ny paid to the Reg­is­trar of Com­pa­nies. The fees charged by the Reg­is­trar of Com­pa­nies for the reg­is­tra­tion and approval of the name are com­pul­so­ri­ly levied on B. A is mere­ly act­ing as a pure agent in the pay­ment of those fees. There­fore, A’s recov­ery of such expens­es is a dis­burse­ment and not part of the val­ue of sup­ply made by A to B.

 

8. Rate of exchange of cur­ren­cy, oth­er than Indi­an rupees, for deter­mi­na­tion of — The rate of exchange for the deter­mi­na­tion of the val­ue of tax­able goods or ser­vices or both shall be the applic­a­ble ref­er­ence rate for that cur­ren­cy as deter­mined by the Reserve Bank of India on the date of time of sup­ply in respect of such sup­ply in terms of sec­tion 12 or, as the case may be, sec­tion 13 of the Act.

 

9. Val­ue of sup­ply inclu­sive of inte­grat­ed tax, cen­tral tax, State tax, Union ter­ri­to­ry tax.-Where the val­ue of sup­ply is inclu­sive of inte­grat­ed tax or, as the case may be, cen­tral tax, State tax, Union ter­ri­to­ry tax, the tax amount shall be deter­mined in the fol­low­ing man­ner, namely,-

 

Tax amount = (Val­ue inclu­sive of tax­es X tax rate in % of IGST or, as the case may be, CGST, SGST or UTGST) ÷ (100+ sum of tax rates, as applic­a­ble, in %)

 

Expla­na­tion.- For the pur­pos­es of the pro­vi­sions of this Chap­ter, the expressions-

• “open mar­ket val­ue” of a sup­ply of goods or ser­vices or both means the full val­ue in mon­ey, exclud­ing the inte­grat­ed tax, cen­tral tax, State tax, Union ter­ri­to­ry tax and the cess payable by a per­son in a trans­ac­tion, where the sup­pli­er and the recip­i­ent of the sup­ply are not relat­ed and the price is the sole con­sid­er­a­tion, to obtain such sup­ply at the same time when the sup­ply being val­ued is made;

“sup­ply of goods or ser­vices or both of like kind and qual­i­ty” means any oth­er sup­ply of goods or ser­vices or both made under sim­i­lar cir­cum­stances that, in respect of the char­ac­ter­is­tics, qual­i­ty, quan­ti­ty, func­tion­al com­po­nents, mate­ri­als, and the rep­u­ta­tion of the goods or ser­vices or both first men­tioned, is the same as, or close­ly or sub­stan­tial­ly resem­bles, that sup­ply of goods or ser­vices or both.