SIRC OF ICAI
ARRC on GST
VALUE OF TAXABLE SUPPLY (Section 15 of CGST Act)
Introduction:
 The tax is normally payable on percentage of value of supply of goods & services.
 The value of a supply of goods or services or both shall be the transaction value.
 Transaction Value is the price paid or payable for the supply of goods & services or both
where the supplier and recipient of supply are not related.
 The price is the major part of supply.
The Value of Supply includes:
1. Any taxes, duties, cesses, fees and charges levied under any law for the time being in
force other than this Act.
2. Any amount the supplier is liable to pay for the supply but not included in price paid or
payable for Goods & Services (or) both.
3. Incidental expenses including Commission Expenses Charged by the supplier or any
amount charged by the supplier for supply of goods & services or both, at the time of, or
before delivery of goods & services or both.
4. Interest or Penalty or Late Fee for Payment delay of any supply.
5. Subsidies directly linked to price without the subsidies of Central or State Government
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The Value of Supply does not include:
1. Before Supply: If Discount is duly recorded in invoice issued for supply.
2. After Supply :
(i) Discount is established in terms of agreement before supply and linked to relevant
Invoices.
(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.
Person:
Person includes Legal Person, who are associated in the business of one another in that one is
the sole agent or sole distributor shall be deemed to be related.
Person shall be deemed to “Related Persons” if – Persons are

Officers or directors of one another’s businesses

Legally recognised partners in business

Employer and employee

Person who directly or indirectly controls or holds 25% or more outstanding voting
shares or stock or both of them.

One of them directly or indirectly controls the other

Both of them are directly or indirectly controlled by a third person

Together they directly or indirectly control a third person

They are members of the same family.
Example:
The value of goods &/or services supplied is the transaction value, i.e. the price
paid/payable, which is Rs 3,000 in the example. Assuming CGST=9% and SGST= 9%
Value of Goods or Service
3,000
Add: CGST @ 9%
270
Add: SGST @ 9%
270
Total
3,540
Note: Discounts will be treated differently under GST. Discounts given before or at the time
of supply will be allowed as deduction from transaction value. Discounts given after supply
will be allowed only if certain conditions are satisfied.
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VALUATION RULES (Draft)
1. Value of supply of goods or services where the consideration is not wholly in
money:
When consideration is not money, the value of supply shall,
a) Be the open market value.
b) If open market value is not available the total sum of consideration in money and further
amount equivalent not in money, If it is known at time of supply.
c) If value is not determined under any of the clauses above mentioned then supply of goods
or services or both of like kind and quality;
d) If value is not determinable the value shall be the sum total of consideration in money and
such further amount in money that is equivalent to consideration not in money.
“Open Market Value” of a supply of goods or services or both means the full value in
money, excluding tax and cess payable by a person in a transaction, where the supplier
and the receiver of the supply are not related and 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 situation that relates to characteristics, quality,
quantity, functional components, materials, and 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.
Illustration:
Where a Bike is supplied for Rs.70,000/- along with the exchange of an old bike and if the
price of the new bike without exchange is Rs.78,000/-, the open market value of the new
bike is Rs.78,000/-
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ARRC on GST
2. Value of supply of goods or services or both between distinct or related
persons, other than through an agent:In this the value of supply shall,
(a) Be the open market value of such supply;
(b) If open market value is not available, be the value of supply of goods or services of
like kind and quality;
(c) If value is not determinable under clause (a) or (b), the value shall be determined
based on cost or Residual Method.
When the recipient is eligible for input tax credit then the value in invoice shall be
deemed to open market.
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
(a) be the open market value of the goods supplied, or at the option of the supplier, be 90%
of 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.
(b) The value of a supply is not determinable under clause (a), the same shall be
determined by application of Value of supply of goods or services or both based on cost
& Residual method for determination.
Illustration:
Where a principal supplies dhal to his agent and agent is supplying dhal of like kind and
quality in subsequent supplies at a price of Rs.5,000 per quintal on the day of supply. Another
independent supplier is supplying dhal of like kind and quality to the said agent at the price of
Rs.4,550 per quintal. The value of the supply made by the principal shall be Rs.4,550 per
quintal or where he exercises the option the value shall be 90% of the Rs.5000 i.e. is Rs.4500
per quintal.
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4. Value of supply of goods or services or both based on cost
a) The value of a supply of goods or services or both is not determinable by any of the
preceding rules.
b)
The value shall be 110% of the cost of production or manufacture or cost of
acquisition of such goods or cost of provision of such services.
5. Residual method for determination of value of supply of goods or services or both
a) The value of supply of goods or services or both, cannot be determined under the
consideration is not wholly in money, between distinct or related persons, other than
through an agent, made or received through an agent, based on cost
b) It shall be determined using reasonable means consistent with the principles and
general provisions of Value of Taxable Supply (Section 15)
6. Determination of value in respect of certain supplies
The value of supply of services in relation to purchase or sale of foreign currency,
including money changing
(a) For a currency, when exchanged from, or to, Indian Rupees (INR), 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 (RBI) reference rate for that currency at that time, multiplied by
the total units of currency:
i.
In case where the RBI reference rate for a currency is not available, the value shall be
1% of the gross amount of Indian Rupees provided or received by the person changing
the money:
ii.
In case where neither of the currencies exchanged is Indian Rupee, the value shall be
equal to 1% 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 RBI.
iii.
If a person supplying the services may exercise option to ascertain 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.
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(b) At the option of supplier of services, the value in relation to supply of foreign currency,
including money changing, shall be deemed to be
(i) 1% of the gross amount of currency exchanged for an amount up to Rs.1 Lakh,
subject to a minimum amount of Rs 250;
(ii) Rs.1000 and ½%. of the gross amount of currency exchanged for an amount
exceeding Rs.1 Lakh and up to Rs.10 Lakh and
(iii) Rs.5000 and one tenth of a per cent. of the gross amount of currency exchanged
for an amount exceeding Rs.10 Lakhs, subject to maximum amount of Rs.60000.
(c). The value of 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 5% of the basic fare in the case of domestic bookings, and at the rate of 10% of the
basic fare in the case of international bookings of passage for travel by air.
The value of supply of services in relation to life insurance business shall be:
(a) 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
(b) In case of single premium annuity policies other than (a), ten per cent. of single
premium charged from the policy holder
(c) In all other cases, 25% of the premium charged from the policy holder in the first year
and 12 ½ of the premium charged from policy holder in subsequent years
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 i.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 purchase of such
goods, the value of supply shall be the difference between the selling price and purchase
price and where the value of such supply is negative it shall be ignored.
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 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.
7. Value of supply of services in case of pure agent
The expenditure cost incurred by supplier as pure agent can be excluded if the following
conditions are satisfied
a) the supplier acts as a pure agent of the recipient of the supply, when he makes payment
to the third party as the contract is between third party & and recipient of supply
b) The receiver procures services provided by supplier, service provider in his capacity as
pure agent of receiver of supply.
c) The receiver is liable make payment to third party
d) The receiver authorises the supplier to make payment on his behalf
e) The recipient of supply knows that the services for which payment has been made by the
supplier shall be provided by the third party
f)
The payment made by the supplier on behalf of the recipient of supply has been
separately indicated in the invoice issued by the supplier to receiver
g)
the supplier recovers from the receiver only such amount paid by him to the third party
h) The services procured by the supplier from the third party as a pure agent of the
recipient of supply are in addition to the supply he provides on his own account
8. Rate of exchange of currency, other than Indian rupees, for determination of value
The rate of exchange for determination of 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.
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CA.Ganesh Prabhu Balakumar, +91-98404 71139
SIRC OF ICAI
ARRC on GST
PLACE OF SUPPLY OF GOODS
Place of supply will play vital role for determination levy of CGST & SGST or IGST
Determination of Place of supply of Goods:
The place of supply of goods, other than supply of goods imported into, or exported from
India, shall be as under,
a)
Where the supply involves movement of goods:
Whether by the supplier or the recipient or by any other person, the place of supply of such
goods shall be the location of the goods at the time at which the movement of goods
terminates for delivery to the recipient
b)
Where the goods are delivered by the supplier to a recipient or any other person
on the direction of a third person:
Whether acting as an agent or otherwise, before or during movement of goods, either by
way of transfer of documents of title to the goods or otherwise, it shall be deemed that the
said third person has received the goods and the place of supply of such goods shall be the
principal place of business of such person
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c)
ARRC on GST
Where the supply does not involve movement of goods
Whether by the supplier or the recipient, the place of supply shall be the location of such
goods at the time of the delivery to the recipient
d)
Where the goods are assembled or installed at site
The place of supply shall be the place of such installation or assembly
e)
Where the goods are supplied on board a conveyance
Including a vessel, an aircraft, a train or a motor vehicle, the place of supply shall be the
location at which such goods are taken on board.
Where the place of supply of goods cannot be determined, the place of supply shall be
determined in such manner as may be prescribed.
Place of supply of Service for Import and Export:1)
Imported into India shall be the location of the importer
2)
Exported from India shall be the location outside India.
3)
The provisions of this section shall apply to determine the place of supply of services
where the location of supplier of services and the location of the recipient of services is
in India.
Place of Supply of Services:Location of Supplier: The place of supply of services,
a)
Made to a registered person shall be the location of such person
b)
Made to any person other than a registered person shall be,––
(i) The location of the recipient where the address on record exists; and
(ii) The location of the supplier of services in other cases.
Place of Supply of service is location of Immovable Property :
a)
Directly in relation to an immovable property, including services provided by
architects, interior decorators, surveyors, engineers and other related experts orestate
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agents, any service provided by way of grant of rights to use immovableproperty or for
carrying out or co-ordination of construction work;
b)
By way of lodging accommodation by a hotel, inn, guest house, home stay, club or
campsite, by whatever name called, and including a house boat or any other vessel
c)
By way of accommodation in any immovable property for organising any
marriage or reception or matters related thereto, official, social, cultural, religious or
business function including services provided in relation to such function at such property;
or
d)
Any services ancillary to the services referred to in clauses (a), (b) and (c),
shall be the location at which the immovable property or boat or vessel, as the case may be,
is located or intended to be located:
The location of the immovable property or boat or vessel is located or intended to be located
outside India, the place of supply shall be the location of the recipient.
Example:
Say, X Company located in Mumbai engages the services of A Architect also located in
Mumbai,. M/s X request him to make design of residential complex to be constructed in
Hyderabad, Telengana . Mr. A makes design and drawing of the residential complex which
will be constructed in Hyderabad. Therefore as per the provisions of section12 (3), the place
of supply of service will be Hyderabad . Hence Mr. A will be required to charge IGST for the
services rendered to M/s X, although both Mr. A and M/s Y are located of the service
provider and recipient of service are not relevant for deciding place of supply of service.
Place of Supply of services provided by specified person:
1.
The place of supply of restaurant and catering services, personal grooming, fitness,
beauty treatment, health service including cosmetic and plastic surgery shall be the location
where the services are actually performed.
2.
The place of supply of services in relation to training and performance appraisal.
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Determination of Place of Supply of services :
A person other than a registered person shall be the location where the services are actually
performed.
a)
The place of supply of services provided by way of admission to a cultural, artistic,
sporting, scientific, educational, entertainment event or amusement park or any other place
and services ancillary thereto, shall be the place where the event is actually held or where
the park or such other place is located.
b)
The place of supply of services provided by way of,—organisation of a cultural,
artistic, sporting, scientific, educational or entertainment event including supply of services
in relation to a conference, fair, exhibition, celebration or similar events
c)
The place of supply of services by way of transportation of goods, including bymail or
courier to,––
(a) A registered person shall be the location of such person;
(b) A Unregistered person shall be the location at which such goods are handed over
for their transportation.
d) The place of supply of passenger transportation service to,—
(a) A registered person shall be the location of such person;
(b) A Unregistered person shall be the place where the passenger embarks on the
conveyance for a continuous journey
e)
Provided that where the right to passage is given for future use and the point of
embarkation is not known at the time of issue of right to passage, the place of supply of such
service shall be determined in accordance with the provisions of sub-section (2).
f)
The place of supply of services on board a conveyance, including a vessel, anaircraft, a
train or a motor vehicle, shall be the location of the first scheduled point ofdeparture of that
conveyance for the journey.
Example: Say Airline X provides the services of Transportation of passenger by air in
Mumbai – Delhi route. The food is served on board during the journey of Mumbai-Delhi. The
food is supplied by Y caterer to aircraft in Mumbai. As per subsection (10) , the place of
supply of service will be Mumbai as per scheduled point of department of aircraft’s journey
in Mumbai.
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Telecommunication, Data Transfer, Broadcasting, cable, DTH, etc.:
The place of supply of telecommunication services including data transfer, broadcasting, and
cable and direct to home television services to any person shall
a) In case of services by way of fixed telecommunication line, leased circuits,
Internet leased circuit, cable or dish antenna, be the location where the telecommunication
line, leased circuit or cable connection or dish antenna is installed for receipt of services;
(b) In case of mobile connection for telecommunication and internet services
provided on post-paid basis, be the location of billing address of the recipient of
services on the record of the supplier of services;
(c) in cases where mobile connection for telecommunication, internet service
and direct to home television services are provided on pre-payment basis through a voucher.
Banking & Other Financial Services including Stock Broking:
The place of supply shall be location of the supplier of services
a)
The address of the recipient as per the records of the supplier of services is not
available, the place of supply shall be location of the supplier of services
b)
If any pre-paid service is availed or the recharge is made through internet banking or
other electronic mode of payment, the location of the Recipient of services on the record of
the supplier of services shall be the place of Supply of such services.
c)
The place of supply of banking and other financial services, including stock Broking
services to any person shall be the location of the recipient of services on the Records of the
supplier of services
d)
The location of recipient of services is not on the records of the Supplier, the place of
supply shall be the location of the supplier of services.
The place of supply of insurance services:
(a) To a registered person, is the location of such person;
(b) To a person other than a registered person, is the location of the recipient of services on
the records of the supplier of services.
The place of supply of advertisement services to the Central Government, State
Government, a statutory body or a local authority meant for the States or Union Territories
identified in the contract or agreement shall be taken as being in each of suchStates or
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Union territories and the value of such supplies specific to each State or UnionTerritory shall
be in proportion to the amount attributable to services provided by way ofDissemination in
the respective States or Union territories as may be determined in terms of the contract or
agreement..
Place of supply of services where location of supplier or location of recipient is outside
India:

The provisions of this section shall apply to determine the place of supply of Services
where the location of the supplier of services or the location of the recipient of Services is
outside India.

The place of supply of services except the services specified in the above provisions
shall be the location of the recipient of services.

The location of the recipient of services is not available in the Ordinary course of
business, the place of supply shall be the location of the supplier of Services.
The place of supply of the following services shall be the location where the
Services are actually performed,
Namely:
(a) Services supplied in respect of goods which are required to be made Physically available
by the recipient of services to the supplier of services, or to a
Person acting on behalf of the supplier of services in order to provide the services:
a)
when such services are provided from a remote location by wayof electronic means,
the place of supply shall be the location where goods are situatedat the time of supply of
services
b)
In the caseof services supplied in respect of goods which are temporarily imported
into Indiafor repairs and are exported after repairs without being put to any other use in
India,than that which is required for such repairs
c)
Services supplied to an individual, represented either as the recipient of
Services or a person acting on behalf of the recipient, which requires the physical
Presence of the recipient or the person acting on his behalf, with the supplier for the supply
of services.
 The place of supply of services supplied directly in relation to an immovableproperty,
including services supplied in this regard by experts and estate agents, supply of
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accommodation by a hotel, inn, guest house, club or campsite, by whatever name called,
grant of rights to use immovable property, services for carrying out or co-ordination of
construction work, including that of architects or interior decorators, shall be the place
where the immovable property is located or intended to be located.
 The place of supply of services supplied by way of admission to, or organizationof a cultural,
artistic, sporting, scientific, educational or entertainment event, or a celebration,
conference, fair, exhibition or similar events, and of services ancillary to such admission or
organization, shall be the place where the event is actually held.
 Where any services referred to in sub-section (3) or sub-section (4) or
Sub-section (5) is supplied at more than one location, including a location in the taxable
Territory, its place of supply shall be the location in the taxable territory.
Where the services supplied in more than one State or Union territory, the place of supplyof
such services shall be taken as being in each of the respective States or Union territories
and the value of such supplies specific to each State or Union territory shall be in proportion
to the value for services separately collected or determined in terms of the contract or
agreement entered into in this regard or, in the absence of such contract or agreement, on
such other basis as may be prescribed
The place of supply of the following services shall be the location of the supplierof
services,
Namely:––
(a) Services supplied by a banking company, or a financial institution, or a
Non-banking financial company, to account holders;
(b) Intermediary services;
(c) Services consisting of hiring of means of transport, including yachts but excluding
aircrafts and vessels, up to a period of one month.

The place of supply of services of transportation of goods, other than by way of Mail or
courier, shall be the place of destination of such goods.

The place of supply in respect of passenger transportation services shall be the Place
where the passenger embarks on the conveyance for a continuous journey.

The place of supply of services provided on board a conveyance during the Course of
a passenger transport operation, including services intended to be wholly or Substantially
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consumed while on board, shall be the first scheduled point of departure of That
conveyance for the journey.

The place of supply of online information and database access or retrieval services
shall be the location of the recipient of services.
Person receiving such services shall be deemed to be located in the taxable territory,
if any two of the following no contradictory conditions are satisfied, namely:––
1)
The location of address presented by the recipient of services through internet is in the
taxable territory;
2)
The credit card or debit card or store value card or charge card or smart card or any
other card by which the recipient of services settles payment has been issued in the taxable
territory;
3)
The billing address of the recipient of services is in the taxable territory;
4)
The internet protocol address of the device used by the recipient of services is in the
taxable territory;
5)
The bank of the recipient of services in which the account used for payment is
maintained is in the taxable territory;
6)
The country code of the subscriber identity module card used by the recipient of
services is of taxable territory;
7)
The location of the fixed land line through which the service is received by the
recipient is in the taxable territory.
In order to prevent double taxation or non-taxation of the supply of a service, or for the
uniform application of rules, the Government shall have the power to notify any description
of services or circumstances in which the place of supply shall be the place of effective use
and enjoyment of a service.
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