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TMI BlogValuation in GSTX X X X Extracts X X X X X X X X Extracts X X X X ..... n for all three taxes and also common for goods and services. Q 4. Is contract price not sufficient to determine valuation of supply? Ans. Contract price is more specifically referred to as transaction value and that is the basis for computing tax. However, when the price is influenced by factors like relationship of parties or where certain transactions are deemed to be supply, which do not have a price, the value has to be determined in accordance with the GST Valuation Rules. Q 5. Is reference to GST Valuation Rules required in all cases? Ans. No. Reference to GST Valuation Rules is required only in cases where value cannot be determined under subsection (1) of Section 15 . Q 6. Can the transaction value declared under section 15(1) be accepted? Ans. Yes, if all the conditions specified therein have been fulfilled. Q 7. Whether post-supply discounts or incentives are to be included in the transaction value? Ans. Yes. However, where the post-supply discount is established as per the agreement which is known at or before the time of supply and where such discount specifically linked to the relevant invoice and the recipient has reversed input ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e between the selling price and the purchase price and where the value of such supply is negative, it shall be ignored Q 12. How will goods re-possessed from defaulting borrowers be valued? Ans. The proviso to Rule 32(5) of the CGST Rules provides that in case of the purchase value of goods repossessed from an unregistered defaulting borrower, for the purpose of recovery of a loan or debt shall be deemed to be the purchase price of such goods by the defaulting borrower reduced by five percentage points for every quarter or part thereof, between the date of purchase and the date of disposal by the person making such repossession. Q 13. How will works contract service provided by a builder/developer to a prospective flat buyer be valued under GST? Ans. In case of supply of construction service (works contract), involving transfer of property in land or undivided share of land, as the case may be, the value of supply of service and goods portion in such supply shall be equivalent to the total amount charged for such supply less the value of land or undivided share of land, as the case may be, and the value of land or undivided share of land, as the case may be, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... When will open market value become relevant under GST? Ans. Open market value will be relevant in cases where consideration for the supply is not wholly in money. The open market value will be particularly relevant in cases where supply is between related persons, or between distinct persons (entities having same PAN but different GSTIN) and between principal and agent. Q 19. How will value be determined in cases where the consideration for supply is not wholly in money? Ans. Value of supply where the consideration is not wholly in money will be: - a) Open market value of such supply b) if open market value is not available, value shall be 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. c) if value cannot be determined as above, it shall be the value of supply of goods or services or both of like kind and quality. d) if value is not determinable under clause (a) or clause (b) or clause (c), value shall be the sum total of consideration in money and such further amount in money that is equivalent to consideration not in money ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontrols or holds twenty-five per cent or more of the outstanding voting stock or shares of both of them; (v) one of them directly or indirectly controls the other; (vi) both of them are directly or indirectly controlled by a third person; (vii) together they directly or indirectly control a third person; or (viii) they are members of the same family; (ix) Persons who are associated in the business of one another in that one is the sole agent or sole distributor or sole concessionaire, howsoever described, of the other, shall be deemed to be related. It may be noted that the term person also includes legal persons. Q 25. How will value be arrived at when supply is between related persons or distinct persons as specified in sub-section (4) and (5) of section 25 (other than an agent)? Ans. The value of the supply of goods or services or both in such cases 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), be the value as determined by application of rule 30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r services by contacting potential buyers on behalf of the principal. The factor that differentiates a DCA from other agents is that the DCA guarantees the payment to the supplier. In such scenarios where the buyer fails to make payment to the principal by the due date, DCA makes the payment to the principal on behalf of the buyer (effectively providing an insurance against default by the buyer), and for this reason the commission paid to the DCA may be relatively higher than that paid to a normal agent. In order to guarantee timely payment to the supplier, the DCA can resort to various methods including extending short-term transaction-based loans to the buyer or paying the supplier himself and recovering the amount from the buyer with some interest at a later date. Q 29. Whether the temporary short-term transaction based loan extended by the DCA to the recipient (buyer), for which interest is charged by the DCA, is to be included in the value of goods being supplied by the supplier (principal) where DCA is not an agent under Para 3 of Schedule I of the CGST Act? Ans. If the DCA being not an agent under Para 3 of Schedule I of the CGST Act , the temporary short-term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esser 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. (b) The person supplying the services can also exercise below mentioned option istead of valuation method mentioned as (a) to ascertain the value: - 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) one per cent. of the gross amount of currency exchanged for an amount up to one lakh rupees, subject to a minimum amount of two hundred and fifty rupees; (ii) one thousand rupees and half of a per cent. of the gross amount of currency exchanged for an amount exceeding one lakh rupees and up to ten lakh rupees; and (iii) five thousand rupees and one tenth of a per cent. of the gross amount of currency exchanged for an amount exceeding ten lakh rupees, subject to maximum amount of sixty thousand rupees. If the above option is given, such option shall not be withdrawn during the remaining part of that financial year. Q 32. What would be the value of supply of services provided by an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercentage points for every quarter or part thereof, between the date of purchase and the date of disposal by the person making such repossession. Q 35. How will supply of vouchers be valued under GST? Ans. 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. Q 36. Who is a pure agent for the purpose of GST Valuation? Ans. Pure agent means a person who - (a) enters into a contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of goods or services or both; (b) neither intends to hold nor holds any title to the goods or services or both so procured or provided as pure agent of the recipient of supply; (c) does not use for his own interest such goods or services so procured; and (d) receives only the actual amount incurred to procure such goods or services. Illustration . Corporate services firm A is engaged to handle the legal work pertaining to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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