GST Section 15: Complete Guide on Value of Taxable Supply

Section 15 of the CGST Act, 2017, outlines the method for determining the value of taxable supply under GST, which is typically the transaction value—i.e., the price actually paid or payable when the parties are unrelated and the price is the sole consideration. It also mandates inclusion of specific charges like taxes (excluding GST), incidental expenses, subsidies linked to price (excluding government subsidies), and penalties for delayed payments.

Discounts may be excluded if they meet certain conditions. In special cases, the government may notify alternative valuation methods. This comprehensive guide by AUBSP ensures clarity and compliance with the latest GST provisions.

GST Section 15: Value of Taxable Supply – A Complete Guide by AUBSP

Understanding the value of taxable supply under the Goods and Services Tax (GST) regime is crucial for businesses and tax professionals alike. Section 15 of the CGST Act, 2017, lays down the principles for determining this value. In this detailed article, AUBSP explains the provisions of Section 15 using simple language, practical interpretation, and a structured format, making it easier for you to comply with GST regulations.

Section 15 of the CGST Act, 2017 deals with how the value of taxable supply is to be determined. This value becomes the basis on which GST is calculated. Whether you’re a supplier, a recipient, or a compliance officer, understanding this section ensures proper tax invoicing and avoids legal complications.

Determining the Value of Supply

Transaction Value – Section 15(1)

The value of a supply is generally the transaction value. This means the price actually paid or payable for the goods or services, provided:

• The supplier and recipient are not related, and
• The price is the sole consideration for the supply.

This is the most common method used to determine value.

Inclusions in Value of Supply – Section 15(2)

To ensure the full value is taxed, certain components must be added to the transaction value:

Note: Such subsidies must be included in the value by the supplier receiving them.

Exclusions from Value of Supply – Section 15(3)

Some amounts are not included in the taxable value:

Discounts Before or At the Time of Supply

Allowed if recorded in the invoice.

Discounts After Supply

Allowed if:

• The discount is pre-agreed (at or before supply) and linked to invoices, and
• The recipient reverses the ITC related to the discount.

Special Valuation Methods – Section 15(4)

If the value cannot be determined using Section 15(1), the value shall be calculated using rules prescribed by the government (Valuation Rules under GST).

Government Notified Valuation – Section 15(5)

In certain special cases, the government may notify supplies whose value shall be determined as per a prescribed method, overriding Section 15(1) and 15(4).

Notified Supplies under Section 15(5)

As per Notification No. 49/2023, effective from 1st October 2023, the following supplies fall under this category:

Who Are Considered “Related Persons”?

As per the Explanation to Section 15, related persons include:

• Officers or directors in each other’s businesses
• Business partners
• Employer and employee
• Those owning ≥ 25% of voting stock in each other
• One directly or indirectly controls the other
• Both are controlled by a third person
• Together control another person
• Members of the same family

Note: Sole agents, distributors, or concessionaires are also deemed related if they are exclusively connected in business.

Key Dates Summary Table

Final Thoughts by AUBSP

Understanding how to compute the value of taxable supply under GST is fundamental to ensuring compliance and avoiding disputes. As explained in this article by AUBSP, the law provides both general and specific rules to arrive at the correct value.

We strongly recommend taxpayers and professionals stay updated with notifications issued by the government under Section 15(5), as they may impact your invoicing and pricing strategies.

Always rely on trusted sources like AUBSP.com to stay compliant and informed in your GST journey.

FAQs on Value of Taxable Supply

What is the value of taxable supply under GST as per Section 15?
The value is the transaction value, i.e., the price actually paid or payable when the supplier and recipient are not related and the price is the sole consideration.

What is included in the value of supply as per Section 15(2)?
It includes non-GST taxes, duties, incidental expenses, late payment charges, and subsidies linked to price (excluding government subsidies).

Are discounts excluded from the value of supply?
Yes, if given before or at the time of supply and recorded in the invoice, or post-supply if agreed in advance and linked to specific invoices with ITC reversal by the recipient.

What happens if the value of supply cannot be determined under Section 15(1)?
Then it must be determined in the manner prescribed under the rules, as per Section 15(4).

Can the government notify special methods of valuation?
Yes, under Section 15(5), the government can notify specific supplies to be valued in a prescribed manner, overriding normal rules.

What types of supplies are currently notified under Section 15(5)?
As per Notification No. 49/2023, online money gaming, other online gaming, and actionable claims in casinos are notified.

When did the notified valuation for online gaming and casinos come into effect?
The special valuation rules for these supplies came into effect on 1st October 2023.

Who are considered “related persons” under Section 15?
People with common control, business relationships (like employer-employee or business partners), or family members are considered related.

Are sole agents or sole distributors considered related persons?
Yes, if they are associated exclusively in each other’s businesses.

Is a subsidy included in the value of supply?
Yes, if it is directly linked to the price and not provided by the Central or State Government.

Who includes the subsidy in the value—the supplier or recipient?
The supplier who receives the subsidy includes it in the value.

Are packing and commission charges part of the value?
Yes, if charged by the supplier in connection with the supply.

What if the recipient pays expenses that the supplier was liable to pay?
Such amounts are included in the value of supply if not already in the transaction price.

Are GST and Compensation Cess included in the value of supply?
No, GST, SGST/UTGST, and Compensation Cess are not included when charged separately.

Can interest or penalty for delayed payment be taxed?
Yes, interest, late fees, or penalties for delayed payment are included in the value of supply.

What if a discount is offered after supply without a prior agreement?
Such a discount is not excluded from the value and is therefore taxable.

Can the value of supply be zero under any situation?
No, even if the supply is free, valuation will apply as per rules if it’s a taxable transaction.

Is the concept of ‘transaction value’ applicable to related parties?
No, transaction value applies only when the parties are not related and price is the sole consideration.

What happens if price is not the sole consideration for a supply?
Then valuation rules apply, and the open market value or comparable supply method may be used.

What is the role of valuation rules in GST?
They provide methods to determine taxable value when it cannot be established through transaction value.