Page 5 - Chapter 6_Value of Supply

b) Ü The given case is a case of volume discount which are offered by the suppliers to their stockists, etc.
Ü Such discounts are established in terms of an agreement entered into at or before the time of supply which
can be specifically linked to the relevant invoices though not shown on the invoice as the actual quantum
of such discounts gets determined after the supply has been effected and generally at the year end.
Ü Such type of volume discounts are excluded to determine the value of supply provided they satisfy the
parameters laid down in section 15(3) including the reversal of ITC by the recipient of the supply as is
attributable to the discount on the basis of document (s) issued by the supplier.

c) Ü The given case is a case of secondary discounts.
Ü These are the discounts which are not known at the time of supply or are offered after the supply is
already over as per the agreement made at or before the time of supply.
Ü Therefore, such discounts shall not be excluded while determining the value of supply.

QRPs :- Staggered Discounts – Shown on the invoice; not added to the value of supply.
Volume Discounts – Pre-agreed but determined later; excluded from value if ITC is reversed.
Secondary Discounts – Given post-supply; not excluded from the value of supply.

02: Combine Questions on Sec 15(1), 15(2) & 15(3):
Dushyant rents out a commercial building owned by him to Bharat for the month of December, for
Q.4
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 assuming
CGST and SGST rates to be 9% each.
Note: All the amounts given above are exclusive of GST.
[CA Final RTP May 2020] [Study Mat (Similar)]
Answer:-
Computation of the value of supply and the GST liability of Dushyant for the month of December:

Particulars Amount (Rs.)
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 tax paid by Dushyant [Note 3] Nil
Value of Supply 20,50,000
CGST @ 9% 1,84,500
SGST @ 9% 1,84,500

Notes:-
1) Reimbursed Charges – Form part of rent and are included in value as per Section 15(2)(c).
2) Security Deposit – Refundable, not consideration, hence not includible in value.
3) Municipal Tax – Paid by supplier, not charged to recipient, hence not includible in value as per Section 15(2)(b).

inghal Brothers, registered in Uttarakhand has supplied 30 tons of a chemical @ ₹ 50,000 per ton
Q.5
(excluding taxes) to P of Uttarakhand on 8th September, 20XX. The invoice for the supply has also been
issued on the same date. Further, following additional amounts were also charged from P:
Particulars Amount (₹)
Freight 1,80,000
Packing charges 1,10,000

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