335, Vipul Trade Centre, Sector-48, Sohna Road, Gurgaon
Mon - Sat: 9:30-18:00

Weekend MCQ Self Challenge #011 – Valuation Provisions under GST

 

Valuation Provisions under GST

Dear Professional Seniors & Friends,
Welcome to this wonderful weekend MCQ self challenge!

This weekend challenge is on valuation provisions under GST Act having 5 MCQs to be self answered by participants to take self challenge. The objective of this post is to discuss the various valuation provisions to be kept in mind while computing the value of supply. The detailed answer of these MCQs shall be posted on Monday for the self assessment of the participants. This post shall be of immense use of the participant.

Weekend MCQ 11.1: When can the transaction value be rejected for computation of value of supply?
(A) When the buyer and seller are related and price is not the sole consideration.
(B) When the buyer and seller are related or price is not the sole consideration.
(C) It can never be rejected.
(D) When the goods are sold at very low margins.

Weekend MCQ 11.2: A Ltd. Supplies Laptop to Mr B at Rs 50000. Addition to this, following were paid :-

  • Import Duty Paid By A – Rs 3000
  • Freight Paid By B – Rs 500
  • Packing Exp Paid By A – Rs 300

Value of Supply will be Rs

(A) Rs 50,000
(B) Rs 53,000
(C) Rs 53,500
(D) Rs 53,800

Weekend MCQ 11.3: A new phone is supplied for Rs 20,000 along with the exchange of an old phone worth Rs 2,000. Price of the new phone without exchange is Rs 24,000. What will be the value of supply?

(A) Rs 20,000
(B) Rs 22,000
(C) Rs 24,000
(D) Rs 26,000

Weekend MCQ 11.4: A Laptop is supplied for Rs 40,000 along with a barter of printer that is manufactured by the recipient and the value of the printer known at the time of supply is Rs 4,000, but the open market value of laptop is not known. What will be the value of supply?

(A) Rs 40,000
(B) Rs 4,000
(C) Rs 44,000
(D) Rs 48,000

Weekend MCQ 11.5: Mr.X is dealing in buying and selling of second hand goods. He has purchased a second hand AC worth Rs 5,000 and selling that to Mr. Y for Rs 8,000 without any further processing.Mr. X has not claimed ITC on purchase. What will be the value of supply?

(A) Rs 5,000
(B) Rs 8,000
(C) Rs 13,000
(D) Rs 3,000

Sincere Regards!
CA Sanjay Kumar Agrawal
Mobile: 9810116321

To access MCQ posts regularly, please Join Telegram Channel:
https://t.me/caSanjayKumarAgrawal

For All MCQ post please click on:
Webpage: http://www.casanjay.me/
Facebook: https://www.facebook.com/CA.Sanjay.K.Agrawal/
Linkedin: https://www.linkedin.com/in/ca-sanjay-kumar-agrawal/

 

———Answer MCQ Self Challenge #011———

 

Dear Professional Seniors & Friends,

Warm Greetings!

 

This post of MCQ is on the valuation provisions under GST since it is an essential tool to determine the value of supply on which GST is to levy.

 

Answer to MCQ 11.1 : B)

Answer to MCQ 11.2 : D)

Answer to MCQ 11.3 : C)

Answer to MCQ 11.4 : C)

Answer to MCQ 11.5 : D)

 

Practical Analysis for MCQ 11.1

  • As per Section 15(1) of CGST Act, taxable value will be the transaction value i.e. price actually paid or payable if following both conditions are satisfied –
  1. Parties are not related
  2. Price is not the sole consideration
  • So if any of the above condition is not fulfilled, then transaction value shall be rejected for computation of value of supply.

 

Based on the above analysis, correct answer to MCQ 11.1 : B) When the buyer and seller are related or price is not the sole consideration.

 

Practical Analysis for MCQ 11.2

 

  • As per Section 15(2) of CGST Act, following shall be included for the purpose of computing value of supply –

 

(a) any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than this Act, the State Goods and Services Tax Act, the Union Territory Goods and Services Tax Act and the Goods and Services Tax (Compensation to States) 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 of the supply and not included in the price actually paid or payable for the goods or services or both;

 

(c) incidental expenses, including commission and packing, charged by the supplier to the recipient of a supply and any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the time of, or before delivery of goods or supply of services;

 

(d) interest or late fee or penalty for delayed payment of any consideration for any supply; and

 

(e) subsidies directly linked to the price excluding subsidies provided by the Central Government and State Governments.

 

  • Valuation in our case will be Rs 50000 + 3000 + 500     + 300   = Rs 53800

Sec 15(1)   15(2)(a)   15(2)(b)  15(2)(C)

 

Based on the above analysis, correct answer to MCQ 11.2 : D) Rs 53,800.

 

 

Practical Analysis for MCQ 11.3 & 11.4

 

  • Sec 15(4) of CGST Act provides where the value of the supply of goods or services or both cannot be determined under sub-section (1) i.e. transaction value, the same shall be determined by following the valuation rules prescribed.
  • Rule 27 of CGST Rules talks about Value of supply of goods or services where the consideration is not wholly in money.
  • As per that rule the value of supply shall :-

(a) be the open market value of such supply;

(b) if the open market value is not available under clause (a), be the sum total of consideration in money and any such further amount in money as is equivalent to the consideration not in money, if such amount is known at the time of supply;

(c) if the value of supply is not determinable under clause (a) or clause (b), be the value of supply of goods or services or both of like kind and quality;

(d) if the value is not determinable under clause (a) or clause (b) or clause (c), be the sum total of consideration in money and such further amount in money that is equivalent to consideration not in money as determined by the application of rule 30 or rule 31 in that order.

 

Based on the above analysis, correct answer to MCQ 11.3 : C) Rs 24,000 since open market value of mobile phone is available which is Rs 24,000 as per Rule 27(a) of CGST Rules and Correct answer to MCQ 11.4 : C) Rs 44,000 since open market value of laptop is not available, but the sum total of consideration in money i.e. Rs 40,000 and such amount as is equivalent to the consideration not in money i.e. Rs 4,000 will be Rs 44,000 as per Rule 27(b) of CGST Rules.

 

Practical Analysis for MCQ 11.5

 

  • Rule 32 of CGST Rules talks about determination of value in respect of certain supplies. Sub rule 5 of that rule provides for valuation in case of supply of second hand goods.
  • As per that rule, Where a taxable supply is provided by a person dealing in buying and selling of second hand goods i.e., used goods as such or after such minor processing which does not change the nature of the goods and where no input tax credit has been availed on the purchase of such goods, the value of supply shall be the difference between the selling price and the purchase price and where the value of such supply is negative, it shall be ignored.

 

Based on the above analysis, correct answer to MCQ 11.5 : D) Rs 3,000 (Rs 8,000 – Rs 5,000).

 

(Disclaimer: The objective of the MCQ post is just to discuss the concept, it may happen, by change of facts, the answer may be different. Please do not treat this as professional opinion; you can definitely have your own opinion.)

 

Sincere Regards!

CA Sanjay Kumar Agrawal

Mobile: 9810116321

 

To access MCQ posts regularly, please Join Telegram Channel:
https://t.me/caSanjayKumarAgrawal

 

For All MCQ post please click on:

Webpage: http://www.casanjay.me/

Facebook: https://www.facebook.com/CA.Sanjay.K.Agrawal/

Linkedin: https://www.linkedin.com/in/ca-sanjay-kumar-agrawal/

 

#CASanjay #MrCA #MsCA #MCQ #CharteredAccountants  #CharteredAccountant #CA #India

 

Please Post Your Comments & Reviews

Your email address will not be published. Required fields are marked *