Value of Supply – CA Inter Tax Study Material is designed strictly as per the latest syllabus and exam pattern.
Value of Supply – CA Inter Taxation Study Material
Question 1.
Surya Agencies has agreed to supply goods to customer’s premises. Goods valued, ₹ 80,000 are taxable at 5% IGST as it is an inter-State supply. It also pays freight and transit insurance of ₹ 12,000. GTA is a registered entity and has charged GST (6% CGST and 6% SGST) under forward charge.
(i) Compute the Invoice value of supply including IGST.
(ii) What will be the Invoice value of supply including IGST, if the supply was under ex-factory basis instead of door delivery basis?
Answer:
(i) Computation of Invoice value of supply including IGST in case of door delivery.
| Particulars | Amount (₹) |
| Value of Goods | 80,000 |
| Add: Charges for freight & Insurance | 12,000 |
| Value of supply | 92,000 |
| IGST @ 5% (WN1) → 5% of ₹ 92,000 | 4,600 |
| Invoice value of supply | 96,600 |
Working Notes:
- It is a complete supply & principal element in Goods. Therefore the rate of Tax of principal element will be charged on the value.
- Surya agencies can claim ITC of GST paid on GTA services (₹ 1,440 = 12% of 12,000)
(ii) Supply at the Ex-factory price instead of door delivery basis
| Particulars | Amount (₹) |
| Supply of Goods | 80,000 |
| IGST @ 5% of value | 4,000 |
| Invoice value of supply | 84,000 |
Note:
The above answer is based on the view that part (ii) of the question i is an independent case and thus, the information provided in the first paragraph of the question regarding payment of freight and transit insurance by Surya Agencies does not apply to it. Moreover, when the contract is ex-factory, it implies that the freight and insurance will be the buyer’s responsibility and seller will have no role, whatsoever, in delivering the j goods to the customer’s premises.
Question 2.
Vayu Ltd. provides you the following particulars relating to goods supplied by It to Agni Ltd.:
| Particulars | Amount (₹) |
| List price of the goods (exclusive of Taxes and discounts). | 76,000 |
| Special packing at the request of customer to be charged to the customer. | 5,000 |
| Duty levied by local authority on the sale or such goods. | 4,000 |
| CGST and SGST charged in invoice. | 14,400 |
| Subsidy received from a NGO (The price of ₹ 76,000 given above is after considering the subsidy) | 5,000 |
Vayu Ltd. offers 3% dIscount of the list price of the goods which Is recorded in the invoice for the goods. Determine the value of taxable supplies made by Vayu Ltd.
Answer:
Computation of value of taxable supplies by Vayu Ltd.
| Particulars | Amount (₹) |
| List price of the goods | 76,000 |
| Add: Special packing [Note 1] | 5,000 |
| Duty levied by local authority on sale of goods [Note 2] | 4,000 |
| CGST and SGST charged [Note 2] | – |
| Subsidy received from a NGO [Note 3] | 5,000 |
| Less: Discount offered [3% of List price ie. ₹ 76,000 × 3%] [Note-4] | 2,280 |
| Value of taxable supplies | 87,720 |
Notes:
- Being incidental expenses charged by the supplier to the recipient of supply, packing charges are includible in the value as per section 15(2) (c) of the CGST Act, 2017.
- Taxes, duties, etc. levied under any law for the time being in force other than CGST, SGST/UTGST, IGST are includible in the value as per section 15(2)(a) of CGST Act, 2017. Duty levied by local authority on sale of goods has been assumed to be recovered from Agni Ltd. and not included in the list price of the goods.
- Subsidy directly linked to the price received from a non-Government body is includible in the value in terms of section 15(2)(e) of CGST Act, 2017.
- Since discount is known at the time of supply, it is deductible from I the value in terms of section 15(3)(a) of CGST Act, 2017
Question 3.
Dushyant rents out a commercial building owned by him to Bharat for the month of December, for which he charges a rent of ₹ 19,50,000. Dushyant pays the maintenance charges of ₹ 1,00,000 (for the December month) as charged by the local society. These charges have been reimbursed to him by Bharat. Further, Bharat had given ₹ 2,50,000 to Dushyant as interest free refundable security deposit. Further, Dushyant has paid the municipal taxes of ₹ 2,85,000 which he has not charged from Bharat. You are required to determine the value of supply and the GST liability of Dushyant for the month of December, 2020 assuming CGST and SGST rates to be 9% each.
Note: All the amounts given above are exclusive of GST.
Answer:
Computation of the value of supply and the GST liability of Dushyant for the month of December, 2020
| Particulars | Amount (₹) |
| Rent of the commercial building | 19,50,000 |
| Maintenance charges paid to the local society, reimbursed by Bharat [Note 1] | 1,00,000 |
| Interest free refundable security deposit [Note 2] | Nil |
| Municipal taxes paid by Dushyant [Note 3] | Nil |
| Value of supply | 20,50,000 |
| CGST @ 9% | 1,84,500 |
| SGST @ 9% | 1,84,500 |
Notes:
- Maintenance charges paid to the local society, reimbursed by Bharat, such charges ultimately form part of the rent paid by Bharat to Dushyant and thus, will form part of the value.
- Interest free refundable security deposit, Such security deposit does not constitute consideration in terms of section 2(37) of the CGST Act, 2017 and thus, is not includible in the value.
- Municipal taxes paid by Dushyant, the same is not includible in the value since such taxes are not charged to the recipient.
Question 4.
Shri Krishna Pvt. Ltd., a registered dealer, furnishes the following information relating to goods sold by it to Shri Balram Pvt. Ltd. in the course of Intra State.
| Particulars | Amount (₹) | |
| (i) | Price of the goods | 1,00,000 |
| (ii) | Municipal Tax | 2,000 |
| (iii) | Inspection charges | 15,000 |
| (iv) | Subsidies received from Shri Ram Trust (As the products is going to be used by blind association) | 50,000 |
| (v) | Late Fees for delayed payment. (Though Shri Balram Pvt. Ltd. made late payment but these charges are waived by Shri Krishna Pvt. Ltd.) | 1,000 |
| (vi) | Shri Balram Pvt., Ltd. paid to Radhe Pvt. Ltd. (on behalf of Shri Krishna Pvt. Ltd.) weightment charges. | 2,000 |
According to GST Law, determine the value of taxable, supply made by Shri Krishna Pvt. Ltd. It is given that the items given in Point (ii) to (vi) are not considered, while arriving at the price of the goods given in point no. (i). [May 2018 Old Course, 4 Marks]
Answer:
Computation of value of taxable supply made by Shri KrishnaPvt. Ltd.
| Particulars | Note | Amount (₹) | |
| (i) | Price of the goods | 1,00,000 | |
| (ii) | Municipal Tax | A | 2,000 |
| (iii) | Inspection charges | B | 15,000 |
| (iv) | Subsidies received from Shri Ram Trust | C | 50,000 |
| (v) | Late Fees for delayed payment. | D | Nil |
| (vi) | Weightment charges paid to Radhe Pvt. Ltd. by Shri Balram Pvt. Ltd. on behalf of Shri Krishna Pvt. Ltd. | E | 2,000 |
| Value of Taxable Supply | 1,69,000 |
Notes:
(A) Includible in the value as per section 15 of the CGST Act, 2017
(B) Being incidental expenses, the same are includible in the value as per section 15 of the CGST Act, 2017
(C) Since subsidy is received from a non-Government body, the same is includible in the value in terms of section 15 of the CGST Act, 2017. It has been assumed that the subsidy is directly linked to the price
(D) Not includible since waived off
(E) Liability of the supplier being discharged by the recipient, is includible in the value in terms of section 15 of the CGST Act, 2017
Question 5.
Worldwide Pvt. Ltd. (a registered Taxable Person) having the gross receipt of ₹ 50 Lakhs in the previous financial year provides the following information relating to their services for the month of July, 2020
| Sr. No. | Particulars | Amount (₹) |
| (1) | Running a boarding school | 2,40,000 |
| (2) | Fees from prospective employer for campus interview | 1,70,000 |
| (3) | Education Services for obtaining the qualification recognised by Law of Foreign Country | 3,10,000 |
| (4) | Renting of Furnished Flats for Temporary Stay to different persons (Rent per day is less than ₹ 1,000 per person) | 1,20,000 |
| (5) | Conducting Modular Employable Skill Course, Approved by National Council of Vocational Training | 1,40,000 |
| (6) | Conducting Private Tuitions | 3,00,000 |
Compute the value of Taxable Supply and the amount of GST Payable. The above receipts doesn’t include the GST Amount and the rate of GST is 18%. [Nov. 2018 Old Course, 6 Marks]
Answer:
Computation of value of taxable supply and amount of GST payable
| Sr. No. | Particulars | Note | Amount (₹) |
| (1) | Running a boarding school | A | NIL |
| (2) | Fees from prospective employer for campus interview | B | 1,70,000 |
| (3) | Education Services for obtaining the qualification recognised by Law of Foreign Country | C | 3,10,000 |
| (4) | Renting of Furnished Flats for Temporary Stay to different persons (Rent per day is less than ? 1,000 per person) | D | NIL |
| (5) | Conducting Modular Employable Skill Course, Approved by National Council of Vocational Training | E | NIL |
| (6) | Conducting Private Tuitions | F | 3,00,000 |
| Value of taxable supply | 7,80,000 | ||
| GST payable @ 18% | 1,40,000 |
Notes:
(A) Services provided by an educational institution to its students, faculty and staff are exempt.
(B) It is not exempt.
(C) An institution providing education services for obtaining qualification recognized by a foreign country does not qualify as educational institution. Thus, said services are not exempt.
(D) Exempt assuming that rent/declared tariff is less than ₹ 1,000 per day. It has been assumed that total rent per day is less than ₹ 1,000 per flat. However, if it is assumed that total rent per day exceeds ₹ 1,000 per flat, services of renting of flats become taxable and thus, value of taxable supply and GST payable is ₹ 9,00,000 and ₹ 1,62,000 respectively.
(E) An institution providing Modular Employable Skill Course qualifies as educational institution. Services provided by an educational institution to its students, faculty and staff are exempt.
(F) It is not exempt.
Question 6.
Koli Ltd. supplies machinery to Ghisa Ltd. (Dealer in same State), provides following particulars regarding the same. Determine the value of taxable supply of machinery. [May 2019 Old Course, 5 Marks]
| Sr. No. | Particulars | Amount (₹) |
| 1 | Price of Machinery (exclusive of taxes and discounts) | 5,50,000 |
| 2 | One part is directly fitted in machinery at place of Ghisa Ltd. (Amount paid by Ghisa Ltd. directly to supplier, as per contract this amount should be paid by Koli Ltd. and not included in price) | 20,000 |
| 3 | Installation and testing charges for machinery (not included in price.) | 25,000 |
| 4 | Discount 2% on machinery price (Recorded in the invoice) | |
| 5 | Koli Ltd. provides additional 1% discount at year end, based on additional purchase of other machinery |
Answer:
Computation of taxable value of supply of machinery
| Sl. No. | Particulars | Note | Amount (₹) |
| 1 | Price of Machinery (exclusive of taxes and discounts) | 5,50,000 | |
| 2 | Amount paid by Ghisa Ltd. directly to supplier, for a part directly fitted in machinery. | A | 20,000 |
| 3 | Installation and testing charges for machinery | B | 25,000 |
| 4 | Discount 2% on machinery price (₹ 5,00,000 × 2%) | C | (11,000) |
| 5 | Additional discount % at year end | D | Nil |
| Value of taxable supply | 5,84,000 |
Notes: As per section 15 of CGST Act, 2017
(A) Any amount that the supplier is liable to pay in relation to a supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods shall be included in the value of supply.
(B) Any amount charged for anything done by the supplier in respect of the supply of goods at the time of, or before delivery of goods shall be included in the value of supply.
(C) Since discount is given at the time of supply of machinery and recorded in the invoice, the value of the supply shall not include such discount.
(D) Though the additional discount is established before or at the time of supply, it shall not be excluded from the value of supply on the assumption that the same is not linked to the relevant invoice and proportionate ITC has not been reversed by Ghisa Ltd.
Question 7.
Alfa Institute of Management (AIM), a private college, is registered under GST in the State of Punjab. AIM provides the following particulars for the month of April 2020 :
| Sl. No. | Particulars | Amount (₹) |
| i | Tuition Fee received from students pursuing management courses recognized by Punjab University, established by an Act of State Legislature | 18,00,000 |
| ii | Tuition Fee received from students pursuing under-graduate courses recognized by Stan university, London under Dual Degree programmes. | 8,50,000 |
| iii | Fee received from students of Competitive Exam training academy run by a Department of AIM | 5,40,000 |
| iv | Mess fees received from students (Mess is run by AIM on its own) | 3,20,000 |
| v | Amount paid to Local Municipal Corporation for premises taken on rent for conducting coaching classes for Competitive exams. | 50,000 |
| vi | Legal services availed from Top Care and Co., a Partnership firm of advocates, for the Competitive Exam training academy (Intra-state transaction) | 20,000 |
Note:
- Rate of CGST, SGST and IGST are 9%, 9% and 18% respectively for both outward and inward supplies.
- All the amounts given above are exclusive of taxes wherever applicable.
- All the conditions necessary for availing the ITC have been fulfilled wherever applicable.
- No opening balance of ITC under any head of tax.
From the information given above, you are required to calculate the Value of taxable Supply and net GST liability (CGST, SGST or IGST as the case may be) to be paid in cash, if any, by AIM for the month of April, 2020. [Nov. 2019 Old Course, 8 Marks]
Answer:
Computation of value of taxable supply by AIM for April, 2020
| Sl. No. | Particulars | Note | Amount (₹) |
| i | Tuition Fee received from students pursuing management courses | (1) | Nil |
| ii | Tuition Fee received from students pursuing undergraduate courses recognized by Foreign university | (2) | 8,50,000 |
| iii | Fee received from students of Competitive Exam training academy | (3) | 5,40,000 |
| iv | Mess fees received from students | (4) | Nil |
| Total value of taxable supply | 13,90,000 |
Liability under REVERSE Charge Mechanism
| Particulars | Note | CGST (₹) | SGST (₹) |
| Rent paid to Local Municipal Corporation @ 9% of X 50,000 each | (5) | 4,500 | 4,500 |
| Legal services received from Top Care & Co., a partnership firm of advocates @ 9% of X 20,000 each | (6) | 1,800 | 1,800 |
| GST Liability under RCM payable in cash (A) | (7) | 6,300 | 6,300 |
Liability under FORWARD Charge Mechanism
| Particulars | Note | CGST (₹) | SGST (₹) |
| 9% of Value of supply computed above (9% of × ₹ 13,90,000) | (8) | 1,25,100 | 1,25,100 |
| Output tax payable against which ITC can be set off | 1,25,100 | 1,25,100 | |
| Less .ITC of renting immovable property and legal services | (6,300) | (6,300) | |
| Output tax payable after set off of ITC [B] | 1,18,800 | 1,18,800 |
Computation of NET GST LIABILITY to be paid in cash by AIM for April, 2019
| Particulars | CGST (₹) | SGST (₹) |
| Liability under RCM payable in cash (as per “A” calculated above) | 6,300 | 6,300 |
| Output tax payable after set off of ITC (as per “B” calculated above) | 1,18,800 | 1,18,800 |
| Net GST liability payable in Cash | 1,18,800 | 1,18,800 |
Notes:-
(1) Services provided by an educational institution to its students are exempt. Further, educational institution means inter alia an institution providing services by way of education as a part of a curriculum for obtaining a qualification recognised by an Indian law. Therefore, tuition fee received by Punjab University, being an educational institution, is exempt, since it provides qualification recognised by Indian law.
(2) Tuition fee received by Stan University is taxable since Stan University is not an educational institution as qualification provided by it is not recognised by Indian law.
(3) Fee received from students of competitive exam training academy is taxable as Department of AIM is not an educational institution since competitive exam training does not lead to grant of a recognized qualification.
(4) Catering services provided by educational institutions to its students are exempt. It has been assumed that the mess fees has been charged from the students pursuing the qualification recognised by law.
(5) GST is payable under reverse charge in case of renting of immovable property services supplied by a local authority to a registered person.
(6) GST is payable under reverse charge in case of legal services supplied by a firm of advocates to a business entity.
(7) The amount available in the electronic credit ledger may be used for making payment towards output tax. However, tax payable under reverse charge is not an output tax. Therefore, tax payable under reverse charge cannot be set off against the input tax credit and thus, will have to be paid in cash.
(8) Since all the services provided are intra-State, CGST and SGST @ 9% is charged.
Question 8.
Candy Blue Ltd., Mumbai, a registered supplier, is manufacturing Chocolates and Biscuits. It provides the following details of taxable inter-state supply made by it for the month of October 2020:
| Particulars | Amount in (₹) | |
| (0 | List price of goods supplied inter-state | 12,40,000 |
| Item already adjusted in the price give in (i) above: | ||
| (1) | Subsidy from Central Government for supply of Biscuits to Government School. | 1,20,000 |
| (2) | Subsidy from Trade Association for supply of quality Biscuits. | 30,000 |
| Items not adjusted in the price given in (i) above: | ||
| (3) | Tax levied by Municipal Authority | 24,000 |
| (4) | Packing Charges | 12,000 |
| (5) | Late fee paid by the recipient of supply for delayed Payment of invoice | 5,000 |
Calculate the Value of taxable supply made by M/s Candy Blue Ltd. for the month of October 2020. [May 2018, 5 Marks]
Answer:
Computation of value of taxable supply made by Candy Blue Ltd.
(For the month of October, 2020)
| Particulars | Note | Amount (₹) |
| List price of goods supplied inter-state | 12,40,000 | |
| Subsidy from Central Government for supply of Biscuits to Government School. | (1) | Nil |
| Subsidy from Trade Association for supply of quality Biscuits. | (2) | 30,000 |
| Tax levied by Municipal Authority | (3) | 24,000 |
| Packing Charges | (4) | 12,000 |
| Late fee paid by the recipient of supply for delayed Payment of invoice | (5) | 5,000 |
| Value of taxable supply | 13,11,000 |
Notes:
- Since subsidy is received from Government, the same is not includiblein the value in terms of section 15 of the CGST Act, 2017.
- Since subsidy is received from a non-Government body, the same is includible in the value in terms of section 15 of the CGST Act, 2017.
- Includible in the value as per section 15 of the CGST Act, 2017
- Being incidental expenses, the same are includible in the value as per section 15 of the CGST Act, 2017
- Includible in the value as per section 15 of the CGST Act, 2017.
Question 9.
Ms. Achintya a registered supplier in Kochi (Kerala State) has provided the following details in respect of her supplies made within Intra-State for the month of March 2020:
| Particulars | Amount ₹ | |
| (0 | List price of goods supplied intra-state (The items given below from (ii) to (v) have not been adjusted in the list price.) | 3,30,000 |
| (ii) | Taxes (other than GST)levied on sale of the goods | 12,500 |
| (iii) | Packing expenses charged separately in the invoice | 10,800 |
| (iv) | Discount of 1% on list price of goods was provided (recorded in the invoice of goods) | |
| (V) | Subsidy received from State Govt, for encouraging women entrepreneurs | 5,000 |
Compute the value of taxable supply and the gross GST liability of Ms. Achintya for the month of March 2020 assuming rate of CGST to be 9% and SGST to be 9%. All the amounts given above are exclusive of GST. [Nov. 2018 Modified, 5 Marks]
Answer:
Computation of value of taxable supply and gross GST liability of Ms. Achintya (for the month of March, 2020)
| Particulars | Note | Amount ₹ |
| List price of goods | 3,30,000 | |
| Non-GST Taxes levied on sale of the goods | (1) | 12,500 |
| Packing expenses | (2) | 10,800 |
| Subsidy received from State Govt. | (3) | (5,000) |
| Discount of 1% on list price ₹ 3,30,000 | (4) | (3,300) |
| Value of taxable supply | 3,45,000 | |
| CGST@ 9% of ₹ 3,45,000 | 31,050 | |
| SGST@ 9% of ₹ 3,45,000 | 31,050 |
Notes:
As per section 15 of CGST Act, 2017
- My taxes, duties and cesses levied under any law other than CGST, SGST is includible in the value.
- Packing expenses being incidental expenses, are includible in the value.
- Since subsidy is received from State Government, the same is not includible in the value. It has been assumed that such subsidies are directly linked to the price of the goods. Further, since the same has not been adjusted in the list price, the same is to be excluded from the list price.
- Since discount is known at the time of supply, it is deductible from the value.
Question 10.
M/s Apna Bank Limited a Scheduled Commercial Bank has furnished the following details for the month of August, 2020 :
| Particulars | Amount (₹ in Crores) (Excluding GST) |
| Extended Housing Loan to its customers | 100 |
| Processing fees collected from its customers on sanction of loan | 20 |
| Commission collected from its customers on bank guarantee | 30 |
| Interest income on credit card issued by the bank | 40 |
| Interest received on housing loan extended by the bank | 25 |
| Minimum balance charges collected from current account and saving account holder | 01 |
Compute the Value of Taxable supply. Give reasons with suitable assumptions. [May 2019, 6 Marks]
Answer:
Computation of value of taxable supply of M/s. Apna Bank Limited
(for the month of August, 2020)
| Particulars | Note | Amount (₹ in Crores) |
| Extended Housing Loan to its customers | (1) | Nil |
| Processing fees collected from its customers on sanction of loan | (2) | 20 |
| Commission collected from its customers on bank guarantee | (3) | 30 |
| Interest income on credit card issued by the bank | (4) | 40 |
| Interest received on housing loan extended by the bank | (5) | Nil |
| Minimum balance charges collected from current account and saving account holder | (6) | 01 |
| Value of taxable supply | 91 |
Notes:-
- Since money does not constitute goods, extending housing loan is not a supply.
- Interest does not include processing fee on sanction of the loan. Hence, the same is taxable.
- Any commission collected over and above interest on loan, advance or deposit are not exempt.
- Services by way of extending loans insofar as the consideration is represented by way of interest are exempt from tax. However, interest involved in credit card services is not exempt.
- Services by way of extending loans insofar as the consideration is represented by way of interest are exempt from tax.
- My charges collected over and above interest on loan, advance or deposit are not exempt.
Question 11.
Determine the value of supply and the GST liability, to be collected and paid by the owner, with the following particulars:
| Particulars | Amount ₹ |
| Rent of the commercial building | 18,00,000 |
| Maintenance charges collected by local society from the owner and reimbursed by the tenant | 2,50,000 |
| Owner intends to charge GST on refundable advance, as GST is applicable on advance | 6,00,000 |
| Municipal taxes paid by the owner | 3,00,000 |
Answer:
Computation of Value of Supply
| Particulars | Amount (₹) |
| Rent of the commercial building | 18,00,000 |
| Maintenance charges collected by the local society from the owner and reimbursed by the tenant [Note-1] | 2,50,000 |
| Refundable advance [Note-2] | Nil |
| Municipal taxes paid by the owner [Note-3] | Nil |
| Value of supply | 20,50,000 |
| CGST @ 9% | 1,84,500 |
| SGST@ 9% | 1,84,500 |
Notes:-
- Being reimbursed by the tenant, such charges ultimately form part of the rent paid by the tenant to the owner and thus, will form part of the value.
- As per Section 2(31) of the CGST Act, 2017:- Being refundable, the advance is in the nature of security deposit which does not constitute consideration and thus, is not includible in the value.
- Being an expenditure incurred by the supplier, the same is not includible in the value, assuming that such taxes are not charged to the recipient.