Page 10 - Ch5_Value of Supply

Ü Hence, Packing & Handling charges, Assembling & Pattern making charges & Testing charges are not
deducted from total contract price as they already included in value.

CCP 05.04.14.00
Samriddhi Advertisers conceptualized and designed the advertising campaign for a new product
launched by New Moon Pvt. Ltd. for a consideration of ` 5,00,000. Samriddhi Advertisers owed `

20,000 to one of its vendors in relation to the advertising service provided by it to New Moon Pvt. Ltd.
Such liability of Samriddhi Advertisers was discharged by New Moon Pvt. Ltd. New Moon Pvt. Ltd.
delayed the payment of consideration and thus, paid ` 15,000 as interest.
Determine the value of taxable supply made by Samriddhi Advertisers [Applicable Rate=18%]

[Study Mat (Example)]
Answer:-
Determination of the value of taxable supply made by Samriddhi Advertisers:-
Particulars Amount in ₹

Advertising service charges 5,00,000
Payment made by New Moon Pvt. Ltd. to vendor of Samriddhi Advertisers [Note 1] 20,000
Interest for delay in payment of consideration [Rs.15,000 x 100/118] [Round off][Note 2] 12,712
Value of taxable supply 5,32,712

Notes:-
1. Supplier’s liability being incurred by recipient & also not included in price charged is includible in value as
per section 15(2)(b) of CGST Act, 2017.
2. The interest for delay in payment of consideration will be includible in the value of supply as per section
15(2)(d) of CGST Act but, the time of supply of the same will be the date when such interest amount is

actually received as per section 13(6).
Ø Such interest received shall be inclusive of GST and the value shall be computed by backward calculation
i.e. [Int/(100+tax)*100].

Alternative Ans by ICAI:-
Ü It is also possible to assume interest to be exclusive of GST & so, value of supply will be ` 5,35,000.
Ü If in any Question, interest on delay in payment of consideration is there but tax rate is not given, then take
assumption that interest & other amounts in Question are exclusive of GST.

CCP 05.04.15.00
M/s. Flow Pro, a registered supplier, sold a machine to BP Ltd. It provides the following information in
this regard:-

Sr.No. Particulars Amount in ₹
Price of the machine [excluding taxes and other charges mentioned at S. Nos.
(i) 25,000
(ii) and (iii)]
(ii) Third party inspection charges [Such charges were payable by M/s Flow Pro but 5,000

the same have been directly paid by BP Ltd. to the inspection agency. These
charges were not recorded in the invoice issued by M/s Flow Pro.]
(iii) Freight charges for delivery of the machine [M/s Flow Pro has agreed to deliver 2,000
the goods at BP Ltd.’s premises]

72 CA VISHAL BHATTAD 09850850800 www.vsmartacademy.com V’Smart Academy