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GST valuation rules is the process of paying taxes on the percentage value of the supply of the goods or services. This is known as Ad-Valor-Em.
As per Section 15 of GST Act, it is defined that any value of goods or services or supply or both shall be the transaction value; it is the price which has been made paid or payable for the supply of goods or services. Here the supply of goods or services is not related to each other. Price is the sole consideration value.
According to the valuation rules:
Table of Contents
Mr. X is the proprietor of ABC Pvt Ltd. ABC is the business of the supply of eco-friendly air conditioners for which specialized installation is required, which is provided by the ABC Pvt Ltd, and installation charges are extra. It is an eco-friendly air conditioner. The government has awarded him with the reward and it is provided with the specialized subsidy to buyer, and 20 percent shall be borne by the Government of India. The company has already informed its buyers that freight is extra, which is reduced in the final invoice, payable by the buyer. All the air conditioners were sold to unrelated parties.
Valuation of prices is done as per Section 15 of GST.
The concept here means that
It can be concluded that section 15 of the CGST Act and Determination of Value of Supply, CGST Rules, 2017 contains the provision for the valuation of supply of goods and services.
Where the value of goods or services is taken is not in money, the value of supply shall be computed as;
Where a principal supplies rice to his agent and an agent supplying rice to the subsequent agent in the like quantity and kind. The following supplies at the price of Rs. 5000/- per quintal on the day of supply. Another supplier sells the same rice of like kind and quality at Rs. 4550/- per quintal.
The valuation by the principal of supplies shall be determined on the 90 percent of the supplies, it is Rs.4550/-, or the supplies made by the principal shall be RS 4550 per quintal.
When it is difficult to compute the cost of supplies of goods or services at the methods prescribed above. According to the Valuation Rules, supplies shall be computed on the basis of 110% of the COI of such goods or cost of production or manufacture or cost of acquisition of services.
It means that expenditures which have incurred by the supplier as the pure agent as the recipient of the supply of services. It shall be excluded from the supply of service.
As per the valuation rules, the valuation shall not include the following discounts –
1. The discount has been duly recorded in the invoice issued in the respect of supply.
2. Supply has been effectively provided two conditions are fulfilled-
Read our article:Time, Place and Value of Supply under GST
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