Valuation of supply primarily revolves around the determination of the value of supply of goods and or services on which tax is to be levied. Valuation of supply of goods or supply of services shall be the transaction value where the supplier & the recipient is not related part. In the current regime, taxes are to be calculated on the value of goods and services. In general, the transaction value is taken as a value of supply. GST will be charged on the value of the transaction. Transaction Value is the price actually paid (or payable) for the supply of Goods and Services between unrelated parties. i.e. Price is the state consideration.

Valuation of supply includes :

  1. Any taxes, duties, Cess fees, & any charged levied under any act except GST, GST compensation cess will be excluded if charged separately by the supplier.
  2. Any amount that the supplier is liable to pay which has been incurred by the recipient & is not included in the price.
  3. The valuation of supply will include all incidental expenses in relation to sale such as packaging, commission, etc.
  4. Subsidies linked to supply, except Government subsidies will be included.
  5. Interest /Latefees/ Penality for delayed payment of consideration will be included.

Discount under valuation of supply

Discount will be treated differentially under GST. Discount will be given before or at the time of supply will be allowed as deductions from the transaction value. Discount given after supply will be allowed only if certain conditions are satisfied.

Example on the valuation of supply

Let us consider an example of Aditya Ltd, a manufacturer selling electronic items such as Printer, motherboard, keyboard, hard disk & mouse etc. It sells a printer to a wholesaler. The MRP of the Printer is Rs 10000 but Aditya Ltd sells it for Rs 8000.

In Present scenario invoice will be look like this 

Particulars Amount(Rs)
Printer 8000
Add: excise @12.5% 1000
Subtotal 9000
Add: VAT @14.5%(on subtotal) 1305
Total 10305

The value of Goods and services supplied is the transaction value, i.e. the price/payable, which is 8000 in the example. Assuming CGST is 2.5% & SGST is 2.5%.

The Invoice will be look like this:

Particulars Amount(Rs)
Printer 8000
Add: CGST@2.5% 200
Add:SGST@2.5% 200
Total 8400

With the help of the above example it is easy to understand the difference between the valuation of supply currently & under GST.


In case you are confused about GST as a business owner, feel free to consult the GST experts at LegalRaasta. You can get comprehensive assistance on GST Registration and GST Return Filing. You can also use our GST software for doing end-to-end GST compliance