GST Basics #10: Section 15 — What Your Supply Is Actually Worth

Once you are outside the composition scheme, GST is a percentage of the value of the supply. Section 15 decides what that value is: transaction value, what gets added to it, how discounts work, and when the rules take over.

Basics #9 covered the composition scheme. For everyone outside it, GST is a percentage of the value of the supply — and Section 15 decides what that value is. It is not always the number at the bottom of your invoice.

Section 15(1) says the value of a supply is the transaction value — "the price actually paid or payable for the said supply". Two conditions attach: supplier and recipient must not be related, and price must be the sole consideration. Meet both and your invoice value is your taxable value, which is why valuation rarely comes up until, suddenly, it does.

Section 15(2) lists what must be added to the price even if it is not on the invoice. Taxes, duties, cesses, fees and charges levied under any law other than the GST Acts, if charged separately. Any amount the supplier is liable to pay but which the recipient has actually paid. Incidental expenses, including commission and packing, charged by the supplier. Interest, late fee or penalty for delayed payment of consideration — so interest charged to a slow-paying customer carries GST at the rate of the original supply. And subsidies directly linked to the price, but not subsidies given by the Central or State Governments.

Section 15(3) works the other way, on discounts. A discount given before or at the time of supply is excluded if it is "duly recorded in the invoice issued in respect of such supply". A discount given after the supply is excluded only on two conditions together: it was established by an agreement made at or before the time of supply and is linked to the relevant invoices, and the recipient has reversed the credit attributable to it. A year-end turnover discount agreed after the event fails the first limb, and a credit note for it will not reduce your output tax.

Sections 15(4) and 15(5) hand over to Rules 27 to 31 of the CGST Rules, which apply where transaction value cannot be used — related parties, or money not the only consideration. They work down a sequence: open market value, the value of a like supply, cost plus ten per cent under Rule 30, then best judgement under Rule 31. Rule 27 covers non-monetary consideration, Rule 28 related and distinct persons, Rule 29 supplies through an agent.

Remember from Basics #6 that branches in other States are distinct persons under Section 25(4). A stock transfer from Chennai to Bengaluru inside the same company is a supply, and its value comes from Rule 28, not from a figure you choose.

What this means for you: on any unusual transaction, ask three questions — is the other party related, is money the only consideration, are you absorbing a cost the buyer should have borne. If all three are clean, the invoice is the value.

Section 15 is in the CGST Act at https://cbic-gst.gov.in/pdf/CGST-Act-Updated-31082021.pdf and CBIC's own flyer on valuation at https://gstcouncil.gov.in/sites/default/files/e-version-gst-flyers/Valution_in_GST_new.pdf

Topics:section 15 CGST Actvalue of supply GSTtransaction valueGST discount rulesrule 27 CGSTrule 28 related personsstock transfer valuationdistinct persons GSTGST basics ChennaiTamil Nadu GST guide

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