- What is the value of supply under GST?
- Why is the value of supply important?
- How is the value of supply determined?
- Value of Supply for imported goods and services under GST
- Discounted Supplies under GST
- Supply offree items under GST
What is the value of supply under GST?
Thevalue of supply for a transaction is the price or consideration paid by the customer to the supplier. It includes extra charges like shipping and handling, but it does not include GST.
Some actions that aren’t sales, such as stock transfers between two states, are still considered taxable transactions. In these cases, the value of supply is theopen marketvalue,or the amount the goods are expected to sell for.
Why is value of supply important?
The GST to be applied on a transaction will depend on the value of these goods and services sold or transferred.
Buyers can pay for transactions with amonetary consideration by giving the seller cash or electronically transferring money. They can also pay for transactions withnon-monetary considerations by giving the seller other goods or services in exchange.
Finally there are cases where they can pay for transactions partly in cash and partly in kind (by bartering goods or services).Hence it is really important to accurately calculate the value of supply.
How is the value of supply determined?
As a general rule, the value of supply is the amount that was paid for the goods or services, minus GST. Because some transactions arepaidin cash while others are in trade or barter, there are two sets of rules for calculating the value of supply.
- TheGeneral Valuation Rules apply to transactions where the buyer pays the whole price of the products or services in cash.
- In this case, the value of supply is the total price orconsideration paid, minus the GST on that amount.
- Value of Supply = Consideration - GST on Consideration
- TheSpecial Valuation Rules apply to transactions where some or all of the payment is in trade instead of cash.
- Completely non-cash payment
- If the buyer pays entirely in trade and no cash, the value of supply is theopen market value of the products or services, minus the GST on that amount.
- Value of Supply = OMV - GST on OMV
- Partially non-cash payment
- If the buyer pays partially in cash and partially in trade, the value of supply is the cash pricepaid plus the open market value of the traded products or services, minus the GST on that total amount.
- Value of Supply = (Monetary Consideration + In-kind Consideration) - GST on Total ConsiderationNote:The value of supply includes cess, billable expenses, subsidies, penalties, and all taxes except GST (and any other chargesthat may or may not be included in the price of the goods and services supplied).
Value of Supply for imported goods and services under GST
The value of imported goods is calculated based on the rules provided in the Custom Act. Thevalue of supply is the custom value of the imported goods plus the import duty paid. (Custom Value + Import Duty = Valueof Supply)Thevalue oftaxablesupply on an imported service is the total consideration times the taxable percentage. (Value of Taxable Supply =Total Consideration XTaxable Percentage)
Discounted Supplies under GST
When items are sold at a discount, their value for GST changes accordingly. The value of supply is the item’s original value minus the discount amount. (Value of Supply = Original Value - Discount)
The GST is levied upon this value of supply, not the original value.
Supply offree items under GST
It’s time you thought beyond freebie marketing strategies because under GST provisions, you may not be allowed to receive inputtax credit(refund of tax paid on purchase of goods)on goods that were either lost, destroyed, written off or disposed by you as gifts and freesamples.
One way to get input tax credit on items that you give away for free is by declaring their value as a part of taxable supply on your invoices and collect GST on the same (unless you declare its value/OVM as a part of the taxable supply and collect GST on the same).
Rules and provisions related to value of supplies under the GST regime can be found under section15 of the CGST Act, 2017.
FAQs
The full form of GST is Goods and Services Tax.
The Government of any country needs money for its functioning and taxes are a major source of revenue for a Government. Thus, the taxes collected are spent by the Government for the public. These taxes are broadly classified into two types- Direct Tax and Indirect Tax.
What is supply under GST examples? ›
When a transaction takes place, if there is a transfer of title of goods, then it is considered as supply of goods. For example, when you buy a pen from a retailer, the ownership of the pen is transferred from the retailer to you, the customer.
What is the basic concept of supply in GST? ›
Supply is a fundamental economic concept that describes the total amount of a specific good or service that is available to consumers. Supply can relate to the amount available at a specific price or the amount available across a range of prices if displayed on a graph.
What is total supply under GST? ›
All taxes, duties, cesses, fees, and charges are included in the value of the supply, except any separate charges made by the provider for the CGST, SGST, UTGST, and GST cess. Therefore, other taxes, duties, cesses, fees, and charges are included in the taxable value, but GST and GST cess are not.
How to calculate GST? ›
The GST Calculator operates based on a straightforward formula: GST Amount = (Selling Price x GST Rate) / 100.
What does GST mean money? ›
The goods and services tax/harmonized sales tax (GST/HST) credit is a tax-free quarterly payment that helps individuals and families with low and modest incomes offset the GST or HST that they pay. It may also include payments from provincial and territorial programs.
What is the meaning of value of supply in GST? ›
The value of supply for a transaction is the price or consideration paid by the customer to the supplier. It includes extra charges like shipping and handling, but it does not include GST. Some actions that aren't sales, such as stock transfers between two states, are still considered taxable transactions.
What is a GST free supply? ›
Others are "GST-free" which means that the supplier does not charge GST but can claim credits for the GST on its own acquisitions. The main GST-free items are exports, health, food, education, international travel and certain charitable activities. A small range of items are "input taxed".
What are the goods under GST? ›
'Goods' means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply – section 2(52) of CGST Act.
What is output supply in GST? ›
If you are registered for GST, you must charge GST on all taxable supplies at the prevailing GST rate, except for supplies that are subject to customer accounting. The GST that you charge and collect is known as output tax.
“Under Section 2 of the CGST Act, 2017 “capital goods” are defined as goods value of which is capitalized in the books of account of the person claiming ITC and are used in the course or furtherance of business.
What is GST reverse charge? ›
Reverse Charge Mechanism means that GST shall be paid and deposited with the Government by. recipient of Goods / Services and not by Supplier of Goods / Services. As per normal mechanism of levy of GST, the Receiver of Goods / Services pays GST to the Supplier and such supplier then deposits GST with the Government.
What does GST stand for in the US? ›
Value-added Taxes (VAT) / Goods and Services Tax (GST)
The Value Added Tax (VAT) or Goods and Services Tax (GST) are broadly based consumption tax assessed on the value added to goods and services. It applies to all goods and services that are bought and sold for use or consumption in foreign tax jurisdiction.
What does GST mean in time? ›
Currently observing GST – Gulf Standard Time. Currently has same time zone offset as GST (UTC +4) but different time zone name. Gulf Standard Time (GST) is 4 hours ahead of Coordinated Universal Time (UTC). This time zone is in use during standard time in: Asia.
Who pays tax on a GST? ›
In an indirect GST, the skip beneficiary pays the taxes. In an indirect GST, when the estate is settled, it passes tax-free to the primary beneficiary. However, the skip beneficiary (often a grandchild) must pay the taxes when they inherit the money after the primary beneficiary dies.
What is the full form of GST on Instagram? ›
Goods And Service Tax (@gst_news) • Instagram photos and videos.
