Calculation of Value of Supply under GST

There are lots of queries related to value of supply under GST like which expenses will be included in the value of supply while making GST invoice? On which value GST will be calculated?

You have to calculate tax on value of supply as mentioned under CGST act. If you will not calculate correct value of supply then your GST calculated on that value of supply will also be incorrect.

So first you need to know what charges, expenses, taxes, fees or any other amount will be added in the value of supply.

Section 15(1) of the CGST Act states that the value of a supply of goods and services.

Value of Supply Includes Following Items under GST

To calculate GST on value of supply, you have to include the following items in value of goods and services.

  • Any taxes, duties, cesses, fees and charges levied under any law. The taxes like entertainment tax or any other local taxes as categorised under the other taxes, if these taxes are charged severally in invoice than only it will be included otherwise not.
  • Incidental expenses, packing charges, commission (charged by the supplier to the buyer)
  • Many other expenses categorised like loading in factory, testing before supply, weighment, inspection etc. will be included in the ‘value’ of the good done on or before the delivery of goods.
  • Any amount charged for anything done by the supplier in respect of the supply of goods and services or both at the time of delivery of goods or supply of services.
  • Interest or late fee charges or any penalty for delayed payment will also be added to the value of supply while making invoice.
  • Subsidies directly linked to the price (except subsidies provided by the central and state government). For more information about Subsidies which are part of supply or not visit here.

Example for value of supply while adding expenses and taxes

Value of Goods2,00,000/-
Add: Packing Charges (It will be added to calculate GST)10,000/-
Value of Supply  (Qualify for calculating GST)2,10,000/-
GST 18%

CGST 9%

SGST 9%

 

18,900/-

18,900/-

Total2,47,800/-

Value of Supply Does Not Includes Following Items Under GST

Any discount which is given by supplier before or at time of delivery of goods or supply of services.

Example for Value of Supply While Giving Discount 

Value of Goods2,00,000/-
Less: Discount10,000/-
Value of Supply (Qualify for calculating GST)1,90,000/-
Total GST @18%

CGST – 9%

SGST – 9%

17,100

17,100

Total2,24,200

 

Categories GST

3 thoughts on “Calculation of Value of Supply under GST”

  1. Value Of Goods Rs.10000
    Insurance Rs.100
    Freight Rs.1000
    Total Rs.11100
    IGST ?
    CGST ?
    SGST ?

    So Please Clear this Question

  2. We are using our main raw material Biomass briquettes regularly from various suppliers of Gujarat and outside Gujarat.​ Earlier the briquettes were coming on FOR basis + Tax. Now after GST implementation the freight charges which is to be born by supplier, The suppliers are insisting that the freight charges are to be shown separately in the invoice as they have to pay under reverse mechanism. As such they are the showing the same separately in the invoice.

    Kindly let us know whether in any case the freight charges shown in the invoice will effect us or not. 

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