Determine taxable supply value under Section 15 and Rules 27 to 31 for related parties, non-monetary consideration, and the 110% cost-based method.
Note: Section 15(2) mandates adding incidental expenses (packing, freight, commission) and deducting recorded discounts.
Under GST, tax is computed on the "Transaction Value"—the price actually paid or payable when the buyer and seller are not related and price is the sole consideration. When these conditions are not met, statutory Valuation Rules (Rules 27-31) apply sequentially.
Where the value of a supply cannot be determined under Rules 27, 28, or 29, Rule 30 specifies that the taxable value shall be 110% (one hundred and ten percent) of the cost of production, cost of manufacture, or cost of acquisition of such goods or provision of services.
| Rule | Applicable Scenario | Primary Valuation Benchmark |
|---|---|---|
| Rule 27 | Consideration not wholly in money (Barter/Exchange) | Open Market Value (OMV) |
| Rule 28 | Distinct persons / Related entities (Head Office to Branch) | OMV or 90% of recipient's resale price (Full ITC proviso) |
| Rule 29 | Supplies made or received through an agent | OMV or 90% of price charged by agent to customer |
| Rule 30 | Cost-based residual calculation | 110% of Cost of Production / Acquisition |
| Rule 31 | Best Judgment Residual Method | Reasonable means consistent with Section 15 principles |
Where the recipient entity is eligible for full Input Tax Credit (ITC), the invoice value declared by the supplier is deemed to be the Open Market Value (OMV), providing complete flexibility in cross-charge pricing.
Post-supply discounts can only be deducted if: (1) they were established in an agreement before or at the time of supply, (2) linked to specific invoices, and (3) recipient has reversed proportional ITC via credit note.
Cost of production is computed in accordance with CAS-4 (Cost Accounting Standard 4) issued by the Institute of Cost Accountants of India (ICAI), encompassing material, direct labor, and overheads.