Section 15 of the CGST Act, 2017 – Value of Taxable Supply

Layman Meaning

Section 15 tells us on what value GST should be charged. It determines the taxable value of goods or services. GST is generally levied on the transaction value, i.e., the actual price paid or payable by the customer.

Basic Rule

GST Value = Transaction Value

Provided:

1. Supplier and recipient are not related persons, and
2. Price is the sole consideration for the supply.

What is Included in Value? [Section 15(2)]

The following amounts must be added to the taxable value:

✅ Taxes, duties, cess, fees (other than GST) charged separately

✅ Packing charges

✅ Commission and incidental expenses

✅ Expenses incurred by the buyer on behalf of the supplier

✅ Interest, late fee, or penalty for delayed payment

✅ Non-government subsidies directly linked to price.

Example

GST will be charged on ₹1,05,000.

Discounts Not Included in Value [Section 15(3)]

Pre-Supply Discount

Discount is allowed as deduction if:

• Given before or at the time of supply, and
• Mentioned in the invoice.

Example

Price = ₹10,000
Less: Discount = ₹1,000

Taxable Value = ₹9,000

GST will be charged on ₹9,000.

Post-Supply Discount

Allowed only if:

• Agreed before supply,
• Linked to specific invoices, and
• Recipient reverses proportionate ITC.

Related Party Transactions

If supplier and recipient are related, or price is not the sole consideration, the transaction value cannot be adopted. Valuation must then be determined as per the GST Valuation Rules.

CA Exam / Practical Shortcut

Taxable Value = Basic Price + Inclusions – Eligible Discounts

Inclusions:

• Packing
• Freight (if charged)
• Commission
• Interest/Late Fee
• Non-Government Subsidy

Exclusions:

• GST itself
• Eligible discounts.

One-Line Summary

Section 15 determines the value on which GST is calculated. Normally, GST is charged on the transaction value (actual sale price) after adding specified expenses and deducting eligible discounts.