Section 15 of CGST Act 2017: Value of Taxable Supply

Provisions under Section 15 of the Central Goods and Services Tax (CGST) Act, 2017 relating to “Value of Taxable Supply”, are as under:

Section 15 of CGST Act 2017: Value of Taxable Supply (CHAPTER IV – TIME AND VALUE OF SUPPLY)

(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–

(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 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; and

(e) subsidies directly linked to the price excluding subsidies provided by the Central Government and 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 which is given–

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

(b) after the supply 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 notified 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;

(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.

Amendments History:

NA

Commentary on Section 15 of the CGST Act

Section 15 of the Central Goods and Services Tax (CGST) Act 2017 outlines the basis for determining the tax payable under the GST regime in India. It provides a framework for determining the value of taxable supply, which is crucial for calculating the tax liability. The section sets out the general principle for valuing supply, which is the transaction value, and prescribes the inclusions and exclusions from the value.

The section outlines that 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, where the supplier and the recipient are not related and the price is the sole consideration for the supply.

Section 15 also includes components that must be added to the transaction value to determine the value of supply, such as taxes, duties, fees, and charges levied under any law (other than GST) if charged separately by the supplier, incidental expenses charged by the supplier to the recipient, interest, late fees or penalties for delayed payment, and subsidies directly linked to the price (excluding those provided by the Central and State governments).

Discounts given before or at the time of the supply are not included in the value of supply, provided they are reflected in the invoice. Discounts given after the supply are also not included, but only if they are linked to a specific invoice and the recipient has reversed input tax credit.

In cases where the value of the supply cannot be determined under sub-section (1), or where the transaction value is not correctly mentioned or the parties are related, the value of the supply shall be determined as per the rules prescribed by the CGST Rules. These rules are comprehensive and cover various scenarios, such as the supply of goods or services between related parties, the supply of goods or services for a consideration not wholly in money, and the supply of goods or services in cases where the transaction value is not available, among others.

—–

Note: The CGST Act 2017 has been notified vide GOI Notification dt. 12/04/2017, which has subsequently been amended through CGST (Extension to J&K) Act 2017, Finance Act 2018, CGST Amendment Act 2018, Finance Act 2019, Finance Act 2020, Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance 2020, Finance Act 2021, Finance Act 2022 including various Notifications issued by the Govt./ CBIC from time to time, relating to the commencement dates of various Sections/ Provisions in the respective CGST/ Amendment Acts, wherever required. Information on this page is a Section-wise compilation of the Amendments made by various Notifications issued by CBIC from time to time, with best possible efforts for accuracy. In any case, E&OE. For official/ updated information, please visit CBIC website.