Section 15 of CGST Act, 2017 : Section 15: Value Of Taxable Supply

Explanation using Example

Example Scenario:

Imagine a company, ABC Pvt. Ltd., sells goods to an independent retailer, XYZ Stores, for INR 100,000. This is the price both parties agreed upon, and neither party has any control or significant influence over the other. The transaction value of INR 100,000 would be considered the value of the supply of goods under Section 15(1) of the CGST Act, 2017, as the supplier and recipient are not related, and the price is the sole consideration for the supply.

Now, let's say ABC Pvt. Ltd. also charges XYZ Stores an additional INR 5,000 for packaging and INR 2,000 as a shipping fee. Moreover, XYZ Stores agrees to pay a late fee of INR 500 per day for any delayed payment. According to Section 15(2)(c) and (d), the value of the supply will now include these incidental expenses and the late fee, making the total value INR 107,000 plus any applicable late fees if the payment is delayed.

However, if ABC Pvt. Ltd. offers a discount of INR 10,000 on the condition that XYZ Stores pays within 10 days, and this discount is recorded in the invoice, then as per Section 15(3)(a), the value of the supply would be INR 97,000 (assuming payment is made within the discount period).