Rule

Description

27.

Value of supply of goods or services where the consideration
is not wholly in money

 

Where
the supply of goods or services is for a consideration not wholly in money,
the value of the supply shall,-

a)   
be
the open market value of such supply;

b)   
if
the open market value is not available under clause (a), be the sum total of
consideration in money and any such further amount in money as is equivalent
to the consideration not in money, if such amount is known at the time of
supply;

c)   
if
the value of supply is not determinable under clause (a) or clause (b), be
the value of supply of goods or services or both of like kind and quality;

d)   
if
the value is not determinable under clause (a) or clause (b) or clause (c),
be the sum total of consideration in money and such further amount in money
that is equivalent to consideration not in money as determined by the
application of rule 30 or rule 31 in that order.

28.

Value of supply of goods or services or both between distinct
or related persons, other than through an agent

 

The
value of the supply of goods or services or both between distinct persons as
specified in sub-section (4) and (5) of section 25 or where the supplier and
recipient are related, other than where the supply is made through an agent,
shall-

a)   
be
the open market value of such supply;

b)   
if
the open market value is not available, be the value of supply of goods or
services of like kind and quality;

c)   
if
the value is not determinable under clause (a) or (b), be the value as
determined by the application of rule 30 or rule 31, in that order:

Provided
that where the goods are intended for further supply as such by the
recipient, the value shall, at the option of the supplier, be an amount
equivalent to ninety percent of the price charged for the supply of goods of
like kind and quality by the recipient to his customer not being a related
person:

Provided
further that where the recipient is eligible for full input tax credit, the
value declared in the invoice shall be deemed to be the open market value of
the goods or services.

29.

Value of supply of goods made or received through an agent

 

The
value of supply of goods between the principal and his agent shall-

a)  
be
the open market value of the goods being supplied, or at the option of the
supplier, be ninety per cent. of the price charged for the supply of goods of
like kind and quality by the recipient to his customer not being a related
person, where the goods are intended for further supply by the said
recipient.

b)  
where
the value of a supply is not determinable under clause (a), the same shall be
determined by the application of rule 30 or rule 31 in that order.

30.

Value of supply of goods or services or both based on cost

 

Where
the value of a supply of goods or services or both is not determinable by any
of the preceding rules of this Chapter, the value shall be one hundred and
ten percent of the cost of production or manufacture or the cost of
acquisition of such goods or the cost of provision of such services.

31.

Residual method for determination of value of supply of goods
or services or both

 

Where
the value of supply of goods or services or both cannot be determined under
rules 27 to 30, the same shall be determined using reasonable means
consistent with the principles and the general provisions of section 15 and
the provisions of this Chapter:

Provided
that in the case of supply of services, the supplier may opt for this rule,
ignoring rule 30.

31A.

Value of supply in case of lottery, betting, gambling and
horse racing.

(1)

Notwithstanding
anything contained in the provisions of this Chapter, the value in respect of
supplies specified below shall be determined in the manner provided
hereinafter.

(2)

(a) The value of supply of lottery run by State Governments
shall be deemed to be 100/112 of the face value of ticket or of the price as
notified in the Official Gazette by the organising State, whichever is
higher.

(b) The value of supply of lottery authorised by State
Governments shall be deemed to be 100/128 of the face value of ticket or of
the price as notified in the Official Gazette by the
organising State, whichever is higher.

Explanation:–
For the purposes of this sub-rule, the expressions-

(a) “lottery run by State Governments” means a lottery not
allowed to be sold in any State other than the organizing State;

(b) “lottery authorised by State Governments” means a lottery
which is authorised to be sold in State(s) other than the organising State
also; and

(c) “Organising State” has the same meaning as assigned to it
in clause (f) of sub-rule (1) of rule 2 of the Lotteries (Regulation) Rules,
2010.

(3)

The
value of supply of actionable claim in the form of chance to win in betting,
gambling or horse racing in a race club shall be 100% of the face value of
the bet or the amount paid into the totalisator.

32.

Determination of value in respect of certain supplies

(1)

Notwithstanding
anything contained in the provisions of this Chapter, the value in respect of
supplies specified below shall, at the option of the supplier, be determined
in the manner provided hereinafter.

(2)

The
value of supply of services in relation to the purchase or sale of foreign
currency, including money changing, shall be determined by the supplier of
services in the following manner, namely:-

a)  
for a
currency, when exchanged from, or to, Indian Rupees, the value shall be equal
to the difference in the buying rate or the selling rate, as the case may be,
and the Reserve Bank of India reference rate for that currency at that time,
multiplied by the total units of currency:

Provided
that in case where the Reserve Bank of India reference rate for a currency is
not available, the value shall be one per cent. of the gross amount of Indian
Rupees provided or received by the person changing the money:

Provided
further that in case where neither of the currencies exchanged is Indian
Rupees, the value shall be equal to one per cent. of the lesser of the two
amounts the person changing the money would have received by converting any
of the two currencies into Indian Rupee on that day at the reference rate
provided by the Reserve Bank of India.

Provided
also that a person supplying the services may exercise the option to
ascertain the value in terms of clause (b) for a financial year and such
option shall not be withdrawn during the remaining part of that financial
year.

b)  
at
the option of the supplier of services, the value in relation to the supply
of foreign currency, including money changing, shall be deemed to be-

    
i. 
1% of the gross amount of currency exchanged for an amount up
to one lakh rupees, subject to a minimum amount of two hundred and fifty rupees;

   
ii. 
Rs. 1000 and 0.5% of the gross amount of currency exchanged
for an amount exceeding one lakh rupees and up to ten lakh rupees; and

  
iii. 
Rs.5500 and one tenth of a per cent. of the gross amount of
currency exchanged for an amount exceeding ten lakh rupees, subject to a
maximum amount of Rs.60,000.

(3)

The
value of the supply of services in relation to booking of tickets for travel
by air provided by an air travel agent shall be deemed to be an amount
calculated at the rate of five per cent. of the basic fare in the case of
domestic bookings, and at the rate of ten per cent. of the basic fare in the
case of international bookings of passage for travel by air.

Explanation.-
For the purposes of this sub-rule, the expression “basic fare” means that
part of the air fare on which commission is normally paid to the air travel
agent by the airlines.

(4)

The
value of supply of services in relation to life insurance business shall be,-

a)   
the
gross premium charged from a policy holder reduced by the amount allocated
for investment, or savings on behalf of the policy holder, if such an amount
is intimated to the policy holder at the time of supply of service;

b)   
in
case of single premium annuity policies other than (a), ten per cent. of
single premium charged from the policy holder; or

c)   
in
all other cases, twenty five per cent. of the premium charged from the policy
holder in the first year and twelve and a half per cent. of the premium
charged from the policy holder in subsequent years:

Provided
that nothing contained in this sub-rule shall apply where the entire premium
paid by the policy holder is only towards the risk cover in life insurance.

(5)

Where
a taxable supply is provided by a person dealing in buying and selling of
second hand goods i.e., used goods as such or after such minor processing
which does not change the nature of the goods and where no input tax credit
has been availed on the purchase of such goods, the value of supply shall be
the difference between the selling price and the purchase price and where the
value of such supply is negative, it shall be ignored:

Provided
that the purchase value of goods repossessed from a defaulting borrower, who
is not registered, for the purpose of recovery of a loan or debt shall be
deemed to be the purchase price of such goods by the defaulting borrower
reduced by five percentage points for every quarter or part thereof, between
the date of purchase and the date of disposal by the person making such
repossession.

(6)

The
value of a token, or a voucher, or a coupon, or a stamp (other than postage
stamp) which is redeemable against a supply of goods or services or both
shall be equal to the money value of the goods or services or both redeemable
against such token, voucher, coupon, or stamp.

(7)

The
value of taxable services provided by such class of service providers as may
be notified by the Government, on the recommendations of the Council, as
referred to in paragraph 2 of Schedule I of the said Act between distinct
persons as referred to in section 25, where input tax credit is available,
shall be deemed to be NIL.

33.

Value of supply of services in case of pure agent

 

Notwithstanding
anything contained in the provisions of this Chapter, the expenditure or
costs incurred by a supplier as a pure agent of the recipient of supply shall
be excluded from the value of supply, if all the following conditions are
satisfied, namely,-

a)   
the
supplier acts as a pure agent of the recipient of the supply, when he makes
the payment to the third party on authorisation by such recipient;

b)   
the
payment made by the pure agent on behalf of the recipient of supply has been
separately indicated in the invoice issued by the pure agent to the recipient
of service; and

c)   
the
supplies procured by the pure agent from the third party as a pure agent of
the recipient of supply are in addition to the services he supplies on his
own account.

Explanation.-
For the purposes of this rule, the expression “pure agent” means a person
who-

     
i. 
enters into a contractual agreement with the recipient of supply
to act as his pure agent to incur expenditure or costs in the course of
supply of goods or services or both;

    
ii. 
neither intends to hold nor holds any title to the goods or
services or both so procured or supplied as pure agent of the recipient of
supply;

   
iii. 
does not use for his own interest such goods or services so
procured; and

  
iv. 
receives only the actual amount incurred to procure such goods
or services in addition to the amount received for supply he provides on his
own account.

34.

Rate of exchange of currency, other than Indian rupees, for
determination of value

(1)

The
rate of exchange for determination of value of taxable goods shall be the
applicable rate of exchange as notified by the Board u/s 14 of the Customs
Act, 1962 for the date of time of supply of such goods in terms of section 12
of the Act.

(2)

The
rate of exchange for determination of value of taxable services shall be the
applicable rate of exchange determined as per the generally accepted
accounting principles for the date of time of supply of such services in
terms of section 13 of the Act.

35.

Value of supply inclusive of integrated tax, central tax,
State tax, Union territory tax

 

Where
the value of supply is inclusive of integrated tax or, as the case may be,
central tax, State tax, Union territory tax, the tax amount shall be
determined in the following manner, namely,-

Tax
amount = (Value inclusive of taxes X tax rate in % of IGST or, as the case
may be, CGST, SGST or UTGST) ÷ (100+ sum of tax rates, as applicable, in %)

Explanation.-
For the purposes of the provisions of this Chapter, the expressions-

a)   
“open
market value” of a supply of goods or services or both means the full value
in money, excluding the integrated tax, central tax, State tax, Union
territory tax and the cess payable by a person in a transaction, where the
supplier and the recipient of the supply are not related and the price is the
sole consideration, to obtain such supply at the same time when the supply
being valued is made;

b)   
“supply
of goods or services or both of like kind and quality” means any other supply
of goods or services or both made under similar circumstances that, in
respect of the characteristics, quality, quantity, functional components,
materials, and the reputation of the goods or services or both first
mentioned, is the same as, or closely or substantially resembles, that supply
of goods or services or both.

Reference:

[Notification No. 3/2018]