CHAPTER OUTLINE
This Chapter deals with the principles, rules, and methods for determination of value of taxable supply under GST. Since GST is an ad-valorem tax, the correct determination of value is the foundation for accurate tax computation.
The Chapter explains the transaction value concept, inclusions and exclusions from value, valuation in cases where consideration is not wholly in money, valuation between related or distinct persons, valuation through agents, cost-based valuation, residual methods, and special valuation rules for notified supplies.
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STATUTORY REFERENCES
The provisions relating to valuation of supply are contained in Section 15 of the Central Goods and Services Tax Act, 2017, read with Rules 27 to 35 of the Central Goods and Services Tax Rules, 2017, forming Chapter IV – Determination of Value of Supply.
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SECTION–RULE MATRIX
Section Subject Rule
15 Value of taxable supply —
— Value where consideration not wholly in money = Rule 27
— Value of supply between distinct or related persons (other than agent) = Rule 28
— Value of supply through agent = Rule 29
— Value based on cost = Rule 30
— Residual method = Rule 31
— Value in case of lottery, betting, gambling and horse racing = Rule 31A
— Value in respect of certain supplies = Rule 32
— Value where Kerala Flood Cess is applicable = Rule 32A
— Value of supply of services in case of pure agent = Rule 33
— Rate of exchange of currency = Rule 34
— Value inclusive of taxes = Rule 35
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IMPORTANCE OF VALUATION UNDER GST
Every fiscal statute contains provisions for determination of value, as tax is generally levied on an ad-valorem basis, that is, as a percentage of the value of supply. Under GST also, tax is payable as a percentage of the value of supply of goods or services or both.
Section 15 of the CGST Act, 2017 along with Rules 27 to 35 of the CGST Rules, 2017 provides the legal framework for determining the value of supply in various commercial situations and between different categories of persons.
Apart from payment of tax, valuation plays a crucial role in determining several compliance thresholds, such as:
• eligibility for exemption,
• eligibility for composition scheme,
• monthly or quarterly filing of returns,
• requirement to generate e-invoice,
• requirement to generate e-way bill.
Thus, valuation under GST has wide-ranging implications beyond mere tax computation.
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SECTION 15 – VALUE OF TAXABLE SUPPLY
Section 15 lays down the general principles for determination of value of taxable supply.
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15(1) TRANSACTION VALUE
The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the supply, where:
• the supplier and the recipient are not related, and
• the price is the sole consideration for the supply.
Thus, transaction value is accepted as the taxable value only when both conditions are satisfied simultaneously.
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15(2) INCLUSIONS IN VALUE OF SUPPLY
The value of supply shall include the following amounts:

(a) Taxes, duties, cesses, fees and charges levied under any law for the time being in force, other than CGST, SGST, UTGST and Compensation Cess, if charged separately by the supplier.
(b) Any amount that the supplier is liable to pay in relation to the supply, but which has been incurred by the recipient and not included in the price actually paid or payable.
(c) Incidental expenses, including commission and packing, charged by the supplier to the recipient, and any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the time of, or before, delivery of goods or supply of services.
(d) Interest, late fee or penalty for delayed payment of any consideration for any supply.
(e) Subsidies directly linked to the price, excluding subsidies provided by the Central Government and State Governments.