Where the value of supply of goods or services or both that are not valued under Section 15(1) of CGST and SGST Act, shall be determined as per rules – Section 15(4) of CGST Act.
Such valuation may be required in the following circumstances: –
- the consideration whether paid or payable is not money, wholly or partly.
- The supplier and recipient of the supply are related.
Value of Supply where consideration is not wholly in money
Where the supply of goods is for a consideration not wholly in money, the value of the supply shall be as follows:- Rule 27 of CGST and SGST Rules 2017.
- The open market value of such supply,
- If open market value is not available, 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), the value of supply of goods or services or both of like kinds and quality.
- If value is not determinable under clause (a) or clause (b) or clause (c) the sum total of consideration in money and such further amount in money that is equivalent to consideration not in money as determined by rules 30 or 31 of CGST and SGST Rules, 2017, in that order.
Value of supply of goods or services between distinct or related person, other than agent
Where the value of the supply of goods or service or both between distinct persons as specified in section 25(4) and 25(5) of CGST Act or where the supplier and recipient are related, other than where the supply is made through an agency, shall be as follows:-
- the open market value of such supply
- if open market value is not available, the value of supply of goods or services of like kind and quality
- if value is not determinable under clause (a) or (b), the value as determined by application of rules 30 and 31 of CGST and SGST Rules, in that order.
Section 25(4) and 25(5) of CGST Act covered those cases where same person has taken separate registration in different states or even in the same state.
Value in case of exchange or barter
In case of exchange or barter, the actual value of goods is higher than the amount received for such exchange e.g. exchange of old mixer or computer for new mixer or computer for new mixer or computer for new mixer or computer. In such case, the real price of such goods should be considered, as illustrated below.
Where a new phone is being supplied for Rs. 20,000 along with the exchange of an old phone and if the price of the new phone without exchange is Rs.24,000, the open market value of the new phone is Rs. 24,000.
Where a laptop is supplied for Rs. 40,000 along with a barter or printer that is manufactured by the recipient and the value of the printer known at the time of the supply is Rs. 4,000 but the open market value of the laptop is not known, the value of the supply of laptop is Rs. 44,000.
Form the above-mentioned illustration, the first illustration sounds correct but second illustration does not appear to be correct as it is not full barter.
Value of supply of services of booking of air travel tickets
The value of supply of service 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 percent 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 air.
Value of supply of services in relation to life insurance
The value of supply of services in relation to life insurance business shall be as follows (if the premium included risk premium plus investment portion): –
- 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 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 policy holder in subscription years
Value in case of lottery ticket, gambling horse races
Rule 31A of CGST Rules mentions: –
- Value of supply of lottery run by State Government is 100/112 of face value of ticket or price as notified in the Official Gazette, whichever is higher
- Value of supply of lottery authorized by State Government is 100/128 of face value of ticket or price as notified in the Official Gazette of State Government, whichever is higher.
- Value of actionable claim in the form of chance to win in betting, gambling or horse racing in a race club shall be 100% of the face value of bet or the amount paid into the totalizator
Value of token, voucher or coupon
The value of 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, stamp – Rule 32 (6) of CGST and SGST Rules 2017.
Value of supply of services in case of pure agent
Most of the times the supplier incurs expenditure on behalf of recipient and then recovers the amount from him. Such expenditure is not part of value of supply provided by him to service recipient, but is incurred by him as per business practice or convenience.
Here are the additional illustration clarifying the provisions, namely:-
- Outward transport charges paid on behalf of recipient.
- Entry tax amount paid by Clearing & Forwarding Agent, Customs Broker or Transporter on behalf of owners of goods/ Principal.
- Customs duty, dock dues, demurrage, transport charges etc. paid by Customs Broker on behalf of client.
- Special inspection arranged as per specific requirement of recipient
- Advertisement charges paid by Advertising Agency to newspaper on behalf of clients
- Ticket charges paid by Travel Agent to railways or airlines and recovered from his customer.