Goods and Services Tax – GST – By: – Mr. M. GOVINDARAJAN – Dated:- 29-6-2016 – The Central Government has put on the domain the draft rules entitled Goods and Service Tax Valuation (Determination of the Value of Supply of Goods and Services) Rules, 2016. These Rules are applicable to the supply of goods and services under the IGST/CGST/SGST. Transaction value Rule 2(1) (d) defines the term transaction value as the value of goods and/or services within the meaning of section 15 of the CGST Act. Section 15 of the Model GST Act gives provisions for determining the value of supply. Section 15(1) of the Act provides that The value of a supply of goods and/or services shall be the transaction value, that is the price actually paid or payable for the said supply of goods and/or services where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply. Section 15(2) provides that the transaction value shall include- any amount that the
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, charged by the supplier to the recipient of a supply, including any amount charged for anything done by the supplier in respect of the supply of goods and/or services at the time of, or before delivery of the goods or, as the case may be, supply of the services; subsidies provided in any form or manner, linked to the supply; any reimbursable expenditure or cost incurred by or on behalf of the supplier and charged in relation to the supply of goods and/or services; any discount or incentive that may be allowed after the supply has been effected; such post-supply discount which is established as per the agreement and is known at or before the time of supply and specifically linked to relevant invoices shall not be included in the transaction value; The transaction value shall not include any discount allowed before or at the time of supply provided such discount is allowed in the course of normal trade practice and has been duly recorded in the invoice issued in respect of the supply.
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th the goods being valued and supplied by the same person or by a different person. Services of like kind and quality Rule 2(1)(C) defines the phrase services of like kind and quality as services which are identical or similar in nature, quality and reputation as the services being valued and supplied by the same person or by a different person. Methods to determine value The transaction value shall be the value determined in monetary terms. Where the supply consists of both taxable and non-taxable supply, the taxable supply shall be deemed to be for such part of the monetary consideration as is attributable thereto. The transaction value shall be accepted even where the supplier and recipient of supply are related, provided that the relationship has not influenced the price. If the goods are transferred from- one place of business to another place of the same business; the principal to an agent or from an agent to the principal, whether or not situated in the same State, the value of
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y levels; difference in composition, quality and design between the goods and/or services being valued and the goods and/or services with which they are compared; difference in freight and insurance charges depending on the place of supply. Rule 5 provides that if the value cannot be computed under Rule 4 then it shall be based on a computed value which shall include the following- the cost of production, manufacture or processing of the goods or, the cost of provision of the services; charges, if any, for the design or brand; an amount towards profit and general expenses equal to that usually reflected in supply of goods and/or services of the same class or kind as the goods and/or services being valued which are made by other suppliers. Where the value of the goods and/or services cannot be determined under the provisions of rule 5, the value shall be determined using reasonable means consistent with the principles and general provisions of these rules. Rejection of declared value Wh
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value of goods and/or services of like kind and quality at the time of supply; or any mis-declaration of goods and/or services in parameters such as description, quality, quantity, year of manufacture or production. The proper officer shall intimate the supplier in writing the grounds for doubting the truth or accuracy of the value declared in relation to the supply of goods and/or services by such supplier and provides a reasonable opportunity of being heard, before taking a final decision. If after hearing the supplier as aforesaid, the proper officer is, for reasons to be recorded in writing, not satisfied with the value declared, he shall proceed to determine the value in accordance with the provisions of rule 4 or rule 5 or rule 6, proceeding sequentially. Pure Agent Pure Agent means a person who- enters into a contractual agreement with the recipient of service to act as his pure agent to incur expenditure or costs in the course of providing taxable service; neither intends to ho
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s for which payment has been made by the service provider shall be provided by the third party; the payment made by the service provider on behalf of the recipient of service has been separately indicated in the invoice issued by the service provider to the recipient of service; the service provider recovers from the recipient of service only such amount as has been paid by him to the third party; and the goods and/or services procured by the service provider from the third party as a pure agent of the recipient of service are in addition to the services he provides on his own account. Money changer The value of taxable service provided for the services in so far as it pertains to purchase or sale of foreign currency, including money changing, shall be determined by the service provider in the following manner- 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 R
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