GST Valuation rules

Open Market Value: The value of the supply is determined by the open market value, which is the price that the goods or services would fetch if sold in the open market.
Example: A new phone sold for Rs. 20,000 along with an exchange of an old phone, and the price of the new phone without exchange is Rs. 24,000. Thus, the open market value is Rs. 24,000.
Sum of Consideration: If the open market value is not available, the value is the sum of the monetary consideration and any equivalent value for the non-monetary part, if such an amount is known at the time of supply.
Example: A laptop is supplied for Rs. 40,000 with a barter of a printer valued at Rs. 4,000, but the open market value of the laptop is not known. The value of supply is Rs. 44,000.
Like Kind and Quality: If the value cannot be determined by the above methods, use the value of goods or services of similar kind and quality.
Example: If a similar phone model is sold at Rs. 22,000 in the market, use this as the value.
Total Consideration in Money: If none of the above methods are applicable, the value is the sum of the monetary consideration.

Open Market Value: The value is the open market value of the goods or services being supplied.
Like Kind and Quality: If open market value is not available, use the value of similar goods or services.
Example: If related entities are exchanging services, and similar services are priced at Rs. 50,000 in the market, this becomes the value.
Rule 4 or 5: If neither of the above values is determinable, use Rule 4 or Rule 5 for valuation.
Example: Use the cost-based method or residual method if open market value and like kind and quality values are not available.
Invoice Value: If the recipient is eligible for full input tax credit, the invoice value is considered the open market value.

Open Market Value: The value is the open market value of the goods being supplied between the principal and agent.
90% Option: At the supplier’s option, it can be 90% of the price charged for similar supplies by the recipient to unrelated customers.
Example: Principal supplies groundnuts at Rs. 5,000/quintal; value can be Rs. 4,550 (market value) or 90% of Rs. 5,000 (i.e., Rs. 4,500).

110% of Cost: If the value of supply cannot be determined by the preceding rules, it is 110% of the cost of production or acquisition.
Example: If the cost of production of a product is Rs. 10,000, the value of supply is Rs. 11,000.

Reasonable Means: If value cannot be determined by Rules 1 to 4, use reasonable means consistent with the principles of Section 15.
Example: Use the best judgment method based on similar transactions or industry standards.

Foreign Currency: The value of supply in relation to the purchase or sale of foreign currency is determined by the difference between the buying/selling rate and the RBI reference rate for that currency at the time of supply. Alternatively, it can be a percentage of the gross amount exchanged.
Example: For currency exchanged up to Rs. 1 lakh, the value is 1% of the amount exchanged.
Air Travel Agent: The value of services for booking air tickets is 5% of the basic fare for domestic bookings and 10% for international bookings.
Example: If the basic fare is Rs. 10,000, the value is Rs. 500 for domestic and Rs. 1,000 for international.
Life Insurance: The value of services in life insurance is:
- Gross premium minus investment amount.
- 10% of single premium for single premium annuity policies.
- 25% of the premium for the first year and 12.5% for subsequent years.
Example: For a single premium of Rs. 1 lakh, the value is Rs. 10,000.
Second-Hand Goods: Value is the selling price minus the purchase price; if selling price is less than purchase price, the value is zero.
Example: If a second-hand car is bought for Rs. 3 lakh and sold for Rs. 2.8 lakh, the value is zero.
Vouchers/Coupons: Value is the money value of goods/services redeemable against the voucher.
Example: If a voucher is redeemable for goods worth Rs. 1,000, this is the value.
Distinct Persons: Value is deemed nil for certain notified services between distinct persons.

Exclusion from Value: Costs incurred by a pure agent on behalf of the recipient are excluded if conditions are met, such as acting on behalf of the recipient, separate indication in the invoice, and recovery of only the actual amount paid.
Example: A company pays Rs. 10,000 for legal services on behalf of a client; this amount is excluded from the value if conditions are satisfied.

RBI Reference Rate: Use the RBI reference rate for currency exchange to determine the value on the date of taxation.
Example: For USD to INR exchange, use the RBI rate on the day of transaction.

Open Market Value: Essential for determining value when the consideration is not fully in money.
Like Kind and Quality: Provides an alternative when open market value is not available.
Pure Agent Conditions: Ensure separation of agent costs from supply value.
Currency Exchange: Standardizes valuation in foreign transactions using RBI rates.

These rules ensure comprehensive and fair valuation of supplies under GST, addressing various transaction scenarios and types of consideration.

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