Valuation Rules Under GST

What do you understand by valuation Rule Under GST?

As per the rules of valuation under GST, the tax value can be determined based on the ad-valorem basis. In other words, the taxpayer can determine the value of tax based on the assessed value of goods or/and services supplied. However, these three things shall be taken into consideration at the time of valuation of tax under GST:

i) Transaction Value As per GST, the taxable value is considered as transaction value. In other words, the value that has been paid or has to be paid by the buyer to the supplier will be considered as transaction value under GST. It shall be noted the supplier and buyer shall not be related persons and price is the only consideration. However, for some special cases, here explain the special valuation rules in GST, the transaction value has been determined in special valuation rules of GST, 2017.

ii) Compulsory Inclusions Here are some major things that shall form a part at the time of valuation in GST:

1. Any taxes, fees or charged levied under any other law apart from GST
2. Expenses incurred by the buyer on behalf of the supplier
3. Interest, late-fees or penalty
4. Any direct subsidies or subsidies provided by the government
5. Any other incidental expenses such as commission or packaging and handling costs incurred by the supplier.

iii) Exclusion of Discounts At the time of determining the taxable value, the taxpayer needs to exclude all the discounts from the value of supply whether it is a trade supply or a pre-supply discount. However, the discount provided post supply can also be excluded at the time of valuation for GST if the below-mentioned two conditions are met:

1. If the discount is given as per the condition of the pre-supply agreement made between the buyer and supplier
2. Input Tax Credit (ITC) applicable to such a discount is reversed by the buyer.