Value of Supply- Special Cases - Sec 15 and Rule 32 to 35

Value of Supply - Special Cases - Sec 15 and Rule 32 to 35

Valuation of supply is a significant aspect of the GST law because it is the amount on which GST is payable. Value of supply can be defined as the value of a contract of goods or services, which is the amount being payable for the supply where the purchaser and supplier are not related and the price is the sole consideration for the said supply. In this article, we are going to gain a deeper understanding of valuation rules in different cases.

RULE 32: DETERMINATION OF VALUE IN RESPECT OF VARIOUS SUPPLIES 

1. Money Changer 

The value of supply in case when currency is exchanged

• From or to INR: (Selling rate or Buying rate - RBI Reference rate) X Total units of currency. If the RBI Ref rate for any currency is not available then the value will be equal to 1% of Indian Rupees received or provided by such money changer. 
• Not from or to INR: Value is equal to 1% of the lower of the two amounts the money changer would have received by converting any of the two currencies into INR on that day at the RBI reference rate. 
• Options available with money changer: A money changer may exercise the option to ascertain the value with the below method rules. Such an option once exercised can’t be reversed or withdrawn during the financial year.

       a) 1% of the gross amount of currency exchanged subject to a minimum of Rs 250 - up to Rs 1,00,000.

       b) Rs 1,000 + 0.5% of the gross amount of currency exchanged in INR exceeding Rs 1 Lakh - From Rs 1,00,001 to Rs 10,00,000

       c) Rs 5,500 + 0.1% of the gross amount of currency exchanged in INR exceeding Rs 10 lakh subject to a maximum of Rs 60,000 for each transaction - From Rs 10,00,000. 

       2. Air Travel Agent

Services provided by Air Travel Agent can be valued at 5% of the basic fare on domestic flights and at 10% of the basic fare on international flights. Basic fare means that part of the flight ticket on which the commission is normally paid to the agent by the airline. 

       3. A person dealing in second-hand goods

In the instance of a person who is dealing in secondhand goods, the value is the difference between purchase price and selling price. If such difference is negative then the amount shall be ignored and no GST is computed on such transaction. This is only applicable when second-hand goods are sold after minor processing or the same condition and the nature of the goods is not altered. Moreover, such a person should not avail of any ITC if paid on such transactions. 

       4. The value of a voucher a token a stamp (other than postal) or a coupon is the monetary value of goods or services or both which is redeemable against such vouchers, a token, a stamp, or a coupon. 

       5. Goods repossessed from a defaulting borrower

The value of goods purchased from a defaulting borrower, who has not registered for recovery of a debt or a loan shall be deemed to be the purchase price of such goods by the defaulting borrower by 5% for every quarter or part thereof, from the date of purchase and the date of disposal by the person making such repossession. 

RULE 33: VALUE OF SUPPLY OF SERVICES IN CASE OF PURE AGENT 

As per the provisions of this rule, notwithstanding anything contained in the above rules, the cost or expense incurred by a supplier for the recipient as a pure agent shall be excluded from the value of supply if the following conditions are met completely:

1. The payment made on behalf of the recipient as a pure agent is separately indicated in the invoice issued by the supplier
2. The supplier is acting as a pure agent for the recipient when he is dealing with their party on authorization by such recipient. 
3. The services or goods procured as a pure agent from the third party are in addition to the main supply he has done on his account to the recipient. 

A Pure Agent is defined in the law as a person who:

1. Agrees with the recipient to act as his pure agent to incur cost or expense in the course or furtherance of supply 
2. Does not use the supplies procured for his interest 
3. Neither intends to hold nor hold any ownership or title in the supply so procured or supplied as pure agent for the recipient
4. Receives only the actual cost incurred to procure such supply in addition to the amount received for the supply he provides on his account. 

RULE 34: RATE OF EXCHANGE OF CURRENCY, OTHER THAN INDIAN RUPEES FOR DETERMINATION OF VALUE 

For goods, the value is the rate notified by CBIC under the customs act on the date of supply of such goods.

And for Services, the value is rated as per GAAP on the date of supply of such services.

RULE 35: VALUE OF SUPPLY OF CGST/SGSST/UTGST AND IGST 

Where the value of any supply includes the amount of GST, the tax amount can be calculated by doing a reverse calculation i.e. Tax amount = (Value inclusive of GST * Applicable GST rate %) / (100% + rate of GST in %).

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