Section 15 – Value of Taxable Supply
Section 15 of CGST Act, 2017 – Value of Taxable Supply
Updated on: February 2026 (as amended and applicable till date)
Prepared by: Yours Tax Consultant
1. Bare Act Text – Section 15 (Effective Provisions)
Section 15(1):
The value of a supply of goods or services or both shall be the transaction value,
which is the price actually paid or payable for the said supply
where the supplier and the recipient are not related
and the price is the sole consideration for the supply.
Section 15(2):
The value of supply shall include:
- (a) any taxes, duties, cesses, fees and charges levied under any law other than this Act, the State GST Act, the UTGST Act and the GST (Compensation) Act, if charged separately by the supplier;
- (b) any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient and not included in the price;
- (c) incidental expenses, including commission and packing, charged by the supplier to the recipient;
- (d) interest or late fee or penalty for delayed payment of any consideration;
- (e) subsidies directly linked to the price excluding subsidies provided by the Central Government or a State Government.
Section 15(3):
The value of supply shall not include any discount which is given:
- (a) before or at the time of supply, if such discount has been duly recorded in the invoice; or
-
(b) after the supply has been effected, if:
- such discount is established in terms of an agreement entered into at or before the time of supply, and
- specifically linked to relevant invoices, and
- input tax credit attributable to the discount has been reversed by the recipient.
Section 15(4):
Where the value of supply cannot be determined under sub-section (1),
the same shall be determined in such manner as may be prescribed.
Section 15(5):
Notwithstanding anything contained in sub-section (1) or sub-section (4),
the value of such supplies as may be notified by the Government
shall be determined in such manner as may be prescribed.
2. Objective of Section 15
Section 15 lays down the foundation of valuation under GST. It determines the amount on which GST is chargeable.
Correct valuation is crucial because:
- GST is levied as a percentage of value
- Wrong valuation leads to tax shortfall or excess payment
- Valuation disputes are a major cause of litigation
3. Transaction Value – Section 15(1)
GST follows the principle of transaction value.
Transaction value is acceptable only when:
- Supplier and recipient are not related
- Price is the sole consideration
If these conditions are satisfied, the price actually paid or payable becomes the taxable value.
4. Mandatory Inclusions in Value – Section 15(2)
Certain elements must be compulsorily added to the transaction value.
Important inclusions:
- Non-GST taxes (e.g., customs duty, municipal taxes)
- Expenses paid by recipient on behalf of supplier
- Commission, packing, incidental charges
- Interest or late fee for delayed payment
- Price-linked subsidies (except Government subsidies)
These amounts are taxable even if charged separately.
5. Discounts – Exclusions from Value (Section 15(3))
Discounts are allowed as deduction only if strict conditions are satisfied.
Pre-supply discounts:
- Given before or at the time of supply
- Recorded on the invoice
Post-supply discounts:
- Based on prior agreement
- Linked to specific invoices
- Corresponding ITC reversed by recipient
Failure to meet any condition results in denial of deduction.
6. Valuation Rules – Section 15(4)
Where transaction value is not acceptable, valuation must be done as per prescribed rules.
This generally applies when:
- Supplier and recipient are related
- Price is not the sole consideration
Valuation Rules are contained in:
- Rule 27 – Value where consideration not wholly in money
- Rule 28 – Value between related persons
- Rule 29 – Value between distinct persons
- Rule 30 – Cost-based valuation
- Rule 31 – Residual method
7. Notified Valuation – Section 15(5)
Certain supplies are notified for special valuation methods.
Examples include:
- Foreign currency exchange
- Life insurance services
- Air travel agents
Such supplies must be valued strictly as per notified rules.
8. Common Valuation Disputes
- Inclusion of reimbursements
- Post-sale incentives and discounts
- Related party valuation
- Employer-employee transactions
Most GST audits focus heavily on Section 15 compliance.
9. Related Provisions
10. Professional Tip
Always examine whether transaction value conditions are fulfilled. If supplier and recipient are related or consideration is not wholly monetary, valuation rules must be applied mandatorily.
Disclaimer: This article is prepared on the basis of CGST Act, CGST Rules, notifications and legal position applicable till date. Future amendments or judicial pronouncements may require revision.
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