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Today let us understand Valuation of supply under GST  

GST will be charged on the ‘transaction value’. Transaction value is the price actually paid (or payable) for the supply of goods/services between un-related parties

When determining the value of supply, the following components should be included:

  • Basic consideration for the goods and services
  • Any taxes, cess, duties, fees and charges under any Act
  • Any amount payable by the supplier for the recipient
  • All ancillary or incidental expenses like packing, commission, etc.
  • Subsidies, not Central or State Government subsidies
  • Interest, penalty or late fee charged for delayed payment
  • Any discounts that are given for the supply of goods and services, which were not known earlier.
  • Other discounts, which are linked to specific invoices or were agreed upon at the time of entering into a contract, shall be allowed as a deduction from transaction value.
  • By considering the previously mentioned components in mind, we can determine the value of supply on which GST will be charged.

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