GST AUDIT and its Impact on Statutory Audit/Tax Audit

“BVSS RESIDENTIAL WORKSHOP ON
GST AUDIT AND ITS IMPACT ON STATUTORY
AUDIT/TAX AUDIT”
12th August, 2018
By: Puneet Agrawal
Partner, ALA LEGAL

CONTENTS
 Auditor’s comments on correctness of Valuation
including Transaction Value
 Section 15 provisions and Valuation Rules
 Value of Supply of services in case of Pure Agent
 Reimbursement of expenses
 Margin scheme and other special valuation

AUDITOR’S COMMENTS ON CORRECTNESS OF VALUATION
• The Comments to be provided by the Auditor will depend on the format of the
Audit Report under GST. It is not correct to give comments on the controversial
valuation issues which are not required from Auditor under GST Law, as it may
create difficulties at the time of assessments.
• Firstly, Auditor may ask the Company to provide the details of supply made to
unrelated party and related party. Separately.
Unrelated party transaction:
• Agreed consideration i.e. the price actually paid/ payable is the value of supply of
goods/ services.
• In regard to any receipt from the unrelated party on which the Company has not paid
the tax. Auditor may ask for the reasons from Management and comment on the same
in it’s audit report subject to his understanding on the levy on such recovery.
• Auditor is also required to check any addition as per Section 15(2) where no receipts are
accounted for in the books of accounts. E.g. addition as per S. 15(2)(b). In this case,
Auditor is required to comment on levy as per his understanding.

CONTD…
Related Party Transaction:
• Firstly auditors are required to segregate transaction of related party in two parts-
 With consideration; and
 Without consideration.
• Auditors may check the basis of valuation on which company has paid the tax.
• It depends on the format of the audit report whether the auditor is required to
comment on the computed value as per correct valuation rules.
• In case where the transaction between related parties is without consideration,
auditor may additionally check the levy of GST.

VALUATION ASPECT TO BE CHECKED IN
SCHEDULE I TRANSACTION
SCHEDULE I [ACTIVITIES TO BE TREATED AS SUPPLY EVEN IF MADE
WITHOUT CONSIDERATION]
1. Permanent transfer or disposal of business assets where input tax credit has been availed on such
assets.
2. Supply of goods or services or both between related persons or between distinct persons as specified
in section 25, when made in the course or furtherance of business:
Provided that gifts not exceeding fifty thousand rupees in value in a financial year by an employer to an
employee shall not be treated as supply of goods or services or both.
3. Supply of goods— (a) by a principal to his agent where the agent undertakes to supply such goods on
behalf of the principal; or (b) by an agent to his principal where the agent undertakes to receive such
goods on behalf of the principal.
4. Import of services by a taxable person from a related person or from any of his other establishments
outside India, in the course or furtherance of business.

VALUATION OF CANTEEN SERVICES TO EMPLOYEES
ILLUSTRATION:
• The catering contractor M/s Q charges INR 100/- per plate per employee from M/s A for providing
canteen services.
Situation I:
• No recovery made from employees; and
• The policy is well defined in the Employment contract/ HR policy to provide food to employees.
Treatment
• Canteen service provided by employer to employee can be construed as facility provided to employees
in consideration to their employment services.
• Extract of the Press Release, dt. 10th July,2017:
……Another issue is the taxation of perquisites. It is pertinent to point out here that the services by an employee to the
employer in the course of or in relation to his employment is outside the scope of GST (neither supply of goods or supply
of services). It follows there from that supply by the employer to the employee in terms of contractual agreement entered into
between the employer and the employee, will not be subjected to GST……Another issue is the taxation of perquisites. It
is pertinent to point out here that the services by an employee to the employer in the course of or in relation to his
employment is outside the scope of GST (neither supply of goods or supply of services). It follows there from that supply by
the employer to the employee in terms of contractual agreement entered into between the employer and the employee, will not
be subjected to GST.

CONTD…
Situation II:
• Partial Recovery is made from the Employee say INR 30/- per plate;
Treatment:
• M/s A and employees are related parties.
• Thus, tax is required to be paid as per Valuation Rule and Not on recovery amount.

VALUE OF TAXABLE SUPPLY [S.15(1)]
Value of Supply of Goods or Service or Both
shall be
• Transaction Value
• which is the price actually paid or payable
• Where supplier and recipient of the supply are
not related and
• the price is the sole consideration for the
supply

PRICE – DICTIONARY MEANING
Source Definition of PRICE
Cambridge Advanced
Learner’s Dictionary
The amount of money for which something is sold.
Collins Co build Advanced
Illustrated Dictionary.
The price of something is the amount of money that you have to pay in order to buy it
‘Lectric Law Library’
Lexicon
The consideration in money given for the purchase of a thing.
Three requisites to the quality of a price in order to make a sale:
a. It must be serious, and such as may be demanded
b. The second quality of a price is, that the price be certain and determinate; but what may
be rendered certain is considered as certain
c. The third quality of a price is, that it consists in money, to be paid down, or at a
future time, for if it be of any thing else, it will no longer be a price, nor the contract a
sale, but exchange or barter. The true price of a thing is that for which things of a like
nature and quality
Black’s Law Dictionary The consideration (usually In money) given for the purchase of a thing. Price, generally
means the sum of money which an article is sold for.
The Sale of Goods Act,
1930
S. 2(10) “price” means the money consideration for a sale of goods.

‘RELATED PERSON’ HAS BEEN EXPLAINED AS -
Explanation – For the purpose of this Act
a) A person shall be deemed to be as related person, if :
i) Such persons are officers or directors of one another’s business
ii) Such persons are legally recognized partners in business.
iii) Such persons are employer and employee.
iv) Any person directly or indirectly owns, controls or holds 25% or more of the outstanding voting
stock or shares or both of them.
v) One of them directly or indirectly controls the other.
vi) Both of them are directly or indirectly controlled by a third person.
vii) Together can directly or indirectly control a third person or they are members of same family.
b) The term ‘’Person’’ also includes legal person
c) Persons who are associated in the business of one another in that one is the sole agent or sole
distributor or sole concessionaire, howsoever described, of the other, shall be deemed to be
related.

GST RATES ON CONSTRUCTION OF FLATS/COMMERCIAL UNITS
• Para 2 of Notification [substituted vide Notification No. 1/2018- CT (R)
dated 25.01.2018]
– In case of supply of service specified in column (3), in item (i); sub-item (b), sub-item (c), sub-item (d),
sub-item (da) and sub-item (db) of item (iv); sub-item (b), sub-item (c), sub-item (d) and sub-item (da) of
item (v); and sub-item (c) of item (vi),against serial number 3 of the Table above,
– involving transfer of property in land or undivided share of land,
– the value of such supply shall be equivalent to
– the total amount charged for such supply
– less
– the value of land or undivided share of land and
– the value of land or undivided share of land, as the case may be, in such supply shall be deemed to be
one third of the total amount charged for such supply.
Explanation : For the purposes of paragraph 2, "total amount" means the sum total of,-
(a) consideration charged for aforesaid service; and
(b) amount charged for transfer of land or undivided share of land, as the case may be
including by way of lease or sublease.

IN EFFECT
• In Delhi proportion of circle rate of land to total
value 87%-97%
• All types of constructions painted with same brush:
provision is colour blind
• Arbitrary, and land is being taxed by sub-ordinate
legislation
• Suggestions:
– Enter into separate agreement for land, and separate
agreement for building
– Challenge the notification

INCLUSION IN VALUE [S. 15(2)]
Value of Supply shall include:
a. Any taxes, duties, cesses, fees, charges levied under any law other than this act,
SGST, UTGST, and GST(Compensation to States) Act, if charged separately by
supplier.
b. Amt. that supplier is liable to pay in relation to such supply, but incurred by
recipient and not included in price actually paid or payable for goods or services
or both.
c. Incidental expenses, commission and packing, charged by supplier to recipient
and Amt. charged for anything done by supplier in respect of such supply of
goods or services or both at the time of/before delivery of goods or supply of
services.
d. Interest/late fee/ penalty for delayed payment of any consideration for any
supply.
e. subsidies directly linked to price excluding subsidies provided by CG and SG.
Explanation: The amount of subsidy shall be included in the value of supply of the
supplier who receives the subsidy.

ANY TAXES, DUTIES, CESSES, FEES ETC.
ILLUSTRATIONS:
EDC/IDC charges
Stamp Duty- Advisable to get it directly
paid by customer

VALUATION-FOC MATERIAL
• Section 15 (2)(b) of the CGST Act provides for value of taxable supply which includes the following:-
a. ….;
b. Any amount incurred by the recipient on behalf of the supplier;……
ILLUSTRATION 1:
Mr. P (Principal) enters into an agreement with M/s JW (job-worker) for manufacturing product for P
using Raw Material to be supplied by the P. Agreed Consideration is Rs. 150/- per piece and total agreed
consideration is Rs. 2 Lakhs.
Situation 1:
As per the agreement mould and dies are to be supplied by Mr. P having Cost of Rs. 30,000/-.
–Value of Supply in the hands of Job Worker for Job Work Service = Rs. 2 Lakhs.
Situation 2:
As per the agreement Mr. P shall only supply Raw Material. Due to some reasons M/s JW has asked Mr. P
to purchase moulds and dies for JW and it is agreed that JW shall adjust such amount from the agreed
consideration.
–Value of Supply in the hands of Job Worker for Job Work Service = Rs. 2 Lakhs [Rs. 1.7 Lakhs billed
amount + Rs. 30,000/- addition as per S. 15(2)(b).]

CONTD…
ILLUSTRATION 2:
Mr. C (Contractor) enters into an agreement with M/s XYZ (contractee) for construction
of a building. Total agreed consideration is Rs. 1 Crore.
Situation 1:
As per the agreement, steel and cement are to be supplied as FOC by M/s XYZ having
Cost of Rs. 30 Lakhs.
–Value of Supply of construction service = Rs. 1 Crore.
Situation 2:
As per the agreement all material are to be procured by Mr. C. Due to some reasons Mr. C
has asked M/s XYZ to purchase steel and cement for Mr. P and it is agreed that Mr. P
shall adjust such amount from the agreed consideration.
–Value of Supply in the hands of Contractor for the Construction Service = Rs. 1 Crore [Rs. 70 Lakhs billed
amount + Rs. 30 Lakhs addition as per S. 15(2)(b).]

DISCOUNT – EXCLUDED FROM VALUE [S. 15(3)]
Value of Supply shall not include any Discount which is given-
a. Before or at time of supply if such discount duly recorded in invoice
issued in respect of such supply.
b. After supply's effected, if :
i) Discount is established in terms of agreement entered into at or
before the time of such supply and linked to relevant invoices.
ii) ITC attributable to discount on basis of which document issued by
supplier has been reversed by recipient of supply.

DISCOUNT AFTER SUPPLY
1. Cash Discount on early payment before the end of credit
period
2. Target Discount - A discount of 10% per invoice will be given
to M/s BG (buyer) if he purchases goods worth INR 5,00,000
in the Financial Year from supplier M/s IT.
Auditor should
check
Terms of the
Agreement wrt
Discount
Discount linked
to specific
invoices

ADVANCE RULING ON RATE DIFFERENCE DISCOUNT
Maharashtra AAR held in M/s Ultratech Cement Limited that:
Company has sought advance ruling on giving Rate Difference benefit to
Dealers/Stockist -i.e. where Company ask the Dealers to sell it in Market at price fixed
by the Company
There is no pre-fixed criteria, basis or rationale for arriving at quantum of such
discounts;
Accordingly, observes that mention of bare word ‘discount’ in the agreement without
any parameters / criteria would not fulfill requirement of Section 15(3)(b)(i)
As "word ‘discount’ if left open ended or without any qualifications or criteria
attached can mean there can be any percentage of discount";
Such abnormal discounts without any criteria or basis cannot be considered fair and
an arm’s length business transaction and “no taxation statute can be construed to be
having open ended discount with legislative intent”;
Further elucidates that, “wordings of Section 15(3)(b)(i) very clearly state that
quantum of discount given after the supply of goods has taken place has to be there in
the terms of such agreement i.e. it cannot be open ended not based on any criteria”

INTEREST ETC. FOR DELAYED PAYMENT
• Separately chargeable to GST
• At the time when actually money received

INTEREST ELEMENT
VALUATION OF NON TAXABLE SUPPLY
Facts:
• There is late payment of consideration payable for sale of Petrol. Whether there is
GST implication on the interest for delayed payment of consideration for sale of
Petrol.
Analysis:
• Section 15 is applicable for determining the value of taxable supply. As per section
15(2)(d), Interest for delayed payment of any consideration for any supply shall be
included in the value of Supply.
• Sale of Petrol is not a taxable supply.
• Thus, no question of valuation arises under GST Law in case of Sale of Petrol.
• Thus, no GST is payable on interest charged for delayed payment of consideration
for sale of Petrol.

SUB-SECTION (4) & (5) OF SECTION 15
• Value cannot be determined under sub-section 1
–Shall be determined in prescribed manner
[S.15(4)].
• Value of Notified Supplies - Shall be determined
in prescribed manner [S.15(5)].

VALUATION RULES
Situation Value of supply
Where the supply of goods or
services is for consideration not
wholly on money
- U/Rule 27
a) Open market value of such supply
b) If open market value is not available, then the sum total of consideration in
money and any such amount as is equivalent to consideration not in money if
such amount is known at time of supply
c) If value of supply cannot be determined by above, then value of supply of
goods or services or both of like kind and quality.
d) If the value cannot be determined by above, then it shall 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 application of Rule 30 or Rule 31
in that order.

VALUATION OF RELATED PARTY TRANSACTION
(R. 28)
Rule 28: Value when transaction between related/ distinct persons
Open Market Value of
such supply
Like Kind and Quality
Cost of manufacturing or
production +10% (R.30)
Or
Residual method in terms of
S. 15 (R. 31)
IF Goods intended for further supply by recipient
Value = 90% of price charged for supply of goods of like kind & quality by recipient to
unrelated customer. {at the option of the supplier}
IF recipient eligible for full ITC
Value declared in the invoice deemed to be Open Market Value of the Goods or Services.

OPEN MARKET VALUE (OMV)
• “Open market value” of a supply of goods or services or both means the full value in money,
excluding the integrated tax, central tax, State tax, Union territory tax and the cess payable by
a person in a transaction, where the supplier and the recipient of the supply are not related
and the price is the sole consideration, to obtain such supply at the same time when the
supply being valued is made;
• “Such” has an adjective meaning of the same kind, character; degree, etc. as the one
previously indicated or referred before. The definition of OMV under GST refers to “supply
being valued” in the expression “such supply”. Thus, OMV means the full value in money
payable by a person in a transaction between unrelated parties to obtain a supply of the same
kind/ character as the supply being valued.

LIKE KIND & QUALITY
• “Supply of goods or services or both of like kind and quality” means any other supply of
goods or services or both made under similar circumstances that, in respect of the
characteristics, quality, quantity, functional components, materials, and the reputation of the
goods or services or both first mentioned, is the same as, or closely or substantially
resembles, that supply of goods or services or both.

PROVISO REGARDING LIKE KIND &
QUALITY
Delhi Head
Office
XYZ Ltd.
Mumbai Branch
Office
XYZ Ltd.
Stock transfer to B.O. (say
100 qts. Of `1000/- each)
Un-related
recipient
Intended for
further supply
without consideration
Value of the transaction
between H.O. & B.O.
(at the option of H.O.)
is ` 90,000/-
Sold for
` 1,00,000/-
IF ‘Goods’ intended for further supply by recipient
Value = 90% of price charged for supply of goods of like kind & quality by
recipient to unrelated customer. {at the option of the supplier}

PROVISO REGARDING OMV
Laptop transferred to B.O.
with invoice value
` 50,000/-
Delhi Head
Office
XYZ Ltd.
Mumbai Branch
Office
XYZ Ltd.
B.O. is not involved in any exempt
supply, value declared in the invoice
(` 50,000/-) deemed to be open
market value of the laptop.
IF recipient eligible for full ITC
Value declared in the invoice deemed to be Open Market Value of the Goods/
Services.

CONTINUED..
Value of supply of goods
between principal and agent
- U/Rule 29
a) Open market value of goods or at option of supplier be 90% of price charged
for supply of goods of like kind and quality by recipient to his customer not
being related person, where goods are intended for further supply by said
recipient.
b) If value of supply still not determinable, then it will be determined by
application of rule 30 or 31.
Value of supply of goods or
services or both based on cost
- U/Rule 30
Shall be 110% of cost of production or manufacture or cost of acquisition of such
goods or cost of provision of such services. If value not determinable by preceding
rules.
Residual method for
determination of value of supply
of goods or services or both.
- U/Rule 31
Shall be determined using reasonable manner consistent with principles and general
provisions of S. 15 and these rules
(Proviso) In case of supply of services, supplier may opt this rule disregarding rule 30

CONTINUED..
Value of supply in case of
lottery, betting, gambling and
horse racing.
- U/Rule 31A (vide
Notification No. 03/2018-CT
dated 23.01.2018)
The value in respect of supplies specified below shall be determined in the manner
provided hereinafter.
(1) The value of supply of lottery run by State Governments shall be deemed to be
100/112 of the face value of ticket or of the price as notified in the Official
Gazette by the organising State, whichever is higher.
(2) The value of supply of lottery authorised by State Governments shall be deemed
to be 100/128 of the face value of ticket or of the price as notified in the Official
Gazette by the organising State, whichever is higher.
Explanation:– For the purposes
of this sub-rule, the expressions-
(a) “lottery run by State Governments” means a lottery not allowed to be sold in any
State other than the organizing State;
(b) “lottery authorised by State Governments” means a lottery which is authorised to
be sold in State(s) other than the organising State also; and
(c) “Organising State” has the same meaning as assigned to it in clause (f) of sub-rule
(1) of rule 2 of the Lotteries (Regulation) Rules, 2010.
3) The value of supply of actionable claim in the form of chance to win in betting,
gambling or horse racing in a race club shall be 100% of the face value of the bet or
the amount paid into the totalisator.

MARGIN SCHEME
Illustration 1:
• R.32(5) “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:”
Example: Mr. A is a second hand car dealer. He does not avail ITC on the purchases made by him.
While computing the value of supply of car to other customer, value of supply shall be equal to
purchase price for Mr. A less selling price.
• Proviso to R.32(5) Provided that the purchase value of goods repossessed from a defaulting borrower, who is not
registered, for the purpose of recovery of a loan or debt shall be deemed to be the purchase price of such goods by the
defaulting borrower reduced by five percentage points for every quarter or part thereof, between the date of purchase and the
date of disposal by the person making such repossession.
Example: Mr. B has taken a loan of INR 10,00,000 for purchase of car of INR 15,00,000 from ABC
Ltd. Bank on 04.01.2018. Mr. defaults in payment of 1st and 2nd installment of the loan as a result of
which ABC Ltd. repossessed the car on 10.05.2018. The car was then auctioned by the bank on
09.07.2018 for INR 10,00,000. Compute the value of supply for ABC Ltd.

CONTD…
• Value of Supply = Selling Price – Purchase Price
• Purchase Price for ABC Ltd. = 15,00,000 – (15,00,000*5%*3) = INR 12,75,000
• Thus, Value of Supply = 10,00,000 – 12,75,000 = (2,75,000)
• Since, the value of the supply in this case is negative. Thus, it shall be ignored

CONTD…
Illustration 2:
Facts:
• XYZ Ltd. would like to sell used cars to unrelated parties. Vehicle is lying in the books
of account of XYZ Ltd. and company claims depreciation on the same.
Issue:
• What is the tax rate on sale of old and used motor vehicles?

CONTD…
• As per Notification No. 9/2018- IT(R) dated 25th January, 2018 read with Notification
No. 1/2017- IT(R) dated 28th June, 2017, GST is payable on sale of old and used
motor vehicles on the margin of the supplier at the rate specified in the Notification.
• The term “margin” shall be computed as under:
– Where Depreciation is claimed under Section 32, the Income Tax Act, 1962:
Selling Price (-) Written Down Value
– In any other case:
Selling Price (-) Purchase Price
– In case of negative margin
No tax payable
• The tax rate on which GST is payable on the margin of the sale of old and used cars is
given as under:

CONTD…
S.N
o.
Chapter, Heading,
Subheading or
Tariff item
Description of Goods
Rate
(1) (2) (3) (4)
1. 8703 Old and used, petrol Liquefied petroleum gases (LPG) or compressed natural gas (CNG)
driven motor vehicles of engine capacity of 1200 cc or more and of length of 4000 mm
or more.
Explanation.- For the purposes of this entry, the specification of the motor vehicle shall
be determined as per the Motor Vehicles Act, 1988 (59 of 1988) and the rules made there
under.
9%
2. 8703 Old and used, diesel driven motor vehicles of engine capacity of 1500 cc or
more and of length of 4000 mm
Explanation.- For the purposes of this entry, the specification of the motor
vehicle shall be determined as per the Motor Vehicles Act, 1988 (59 of 1988)
and the rules made there under.
9%
3. 8703 Old and used motor vehicles of engine capacity exceeding 1500 cc, popularly
known as Sports Utility Vehicles (SUVs) including utility vehicles.
Explanation. - For the purposes of this entry, SUV includes a motor vehicle
of length exceeding 4000 mm and having ground clearance of 170 mm. and
above.
9%
4. 8703 All Old and used Vehicles other than those mentioned from S. No. 1 to S.No.3 6%

PURE AGENT – RULE 33
Value shall exclude the expenditure or costs incurred by supplier as a pure agent of recipient of supply of
services; if all the following conditions are satisfied namely;
i. Supplier acts as a pure agent of recipient of supply, when he makes the payment to the third party on
authorisation by such recipient;
ii. The payment made by the pure agent on behalf of the recipient of supply has been separately indicated in the
invoice issued by the pure agent to the recipient of service;
iii. The supplies procured by the pure agent from the third party as a pure agent of the recipient of supply are in
addition to the services he supplies on his own account payment made to third party by him for services
procured as contract for supply made by 3rd party is between 3rd party and recipient of supply

CONTD…
Situation Value of services
Meaning of “Pure Agent: Pure Agent means a Person who -
(a) enters into contractual agreement with recipient of supply
to act as his pure agent to incur expenditure or costs in
course of supply of goods or services or both;
(b) neither intends to hold nor holds any title to
goods/services or both so procured or provided as pure
agent of recipient of supply
(c) does not use for his own interest such goods or services so
procured; and
(d) receives only the actual amount incurred to procure such
goods or services
Suggestion:
1. Since credit will automatically flow in the Returns of recipient , invoice should always be in the
name of ultimate buyer with its GSTIN. Otherwise, credit would not be available to the buyer.
2. In cases where credit chain does not break and there is no clarity on the facts, it is advisable to
take the expenditure in the name of supplier and charge the same from buyer on invoice with
GST.

VALUE IN RESPECT OF CERTAIN SUPPLIES
Situation Value of supply of services
Determination of value in respect of certain supplies specified below, shall be determined in the following manner :
U/Rule 32
Purchase or sale of foreign
currency including money
changing -
U/Rule 32(2)
(Continued)
Shall be determined by supplier of services in following manner –
Currency when exchanged from/to
(INR)
- U/Rule 32 (2) (a)
Difference in buying rate or selling rate
and RBI reference rate for that currency at
time, multiplied by total units of currency.
(Proviso) If RBI reference rate is not
available , value = 1% of gross amount of
Indian rupees provided/received by person
changing money
(Proviso) where neither of the currencies
exchanged is Indian rupee the value = 1%
of lesser of the two amounts the person
changing the money would have received by
converting any of two currencies into
Indian rupee on that day at the reference
rate provided by RBI.
(proviso) Person supplying services
may exercise option to ascertain value
in terms of Rule 32(2)(b) for a
financial year and such option shall not
be withdrawn during remaining part of
that financial year.

CONTD...
Situation Value of supply of services of supply
At option of supplier of services, value in
relation to supply of foreign currency ,
including money changing, shall be :
- U/Rule 32(2)(b)
i) 1% of gross amount of currency
exchanged for an amount upto Rs. 1
lac subject to min. amount of Rs 250
ii) Rs. 1000 and 0.5% of gross amount
of currency exchanged for any amount
exceeding Rs. 1 lac and upto Rs. 10
lacs.
iii) Rs. 5000 and 0.10% gross amount of
currency exchanged for an amount
exceeding Rs. 10 lacs subject to
maximum amount of Rs. 60,000
Supply of services in
relation to booking of
tickets for travel by air
provided by an air travel
agent - U/Rule 32(3)
Domestic Booking – 5% of Basic Fare
International Booking – 10% of Basic Fare
Basic Fare : On which airline normally pays commission to Air Travel Agent

CONTD…
Situation Value of supply of services
Insurance business
- U/Rule32(4)
a) Gross premium charged from policy holder reduced by amount allocated for
investment or savings on behalf of policy holder, if such amount is intimidated
to policy holder at time of supply of service
b) Single premium annuity policies other than (a), 10% of single premium charged
from policy holder
c) Other cases, 25% of premium charged from policy holder in 1st year and 12.5%
of premium charged from policy holder in subsequent years.
(Proviso) Nothing in the sub rule shall apply if entire premium paid by policy holder
is only towards risk cover in life insurance.
When taxable supply is provided
by a person dealing in buying
and selling second hand goods
as such or after such minor
processing's which do not change
in nature of goods and where no
ITC has been availed on
purchases of such goods
- U/Rule 32(5)
Shall be difference between selling price and purchase price
And if value is negative, it shall be ignored.

CONTD...
Situation Value
Token or voucher or coupon
or stamp (no postage stamp)
which is redeemable against a
supply of goods or services or
both.
- U/Rule 32(6)
Shall be equal to money value of the goods or services or both redeemable against
such token, voucher, coupon or stamp.
Taxable services provided by
such class of service
providers as may be notified
by Government on
recommendation of council as
referred to in Entry 2 of
schedule 1 between distinct
persons as refereed to in S. 25
other than those where ITC
is not available under S. 17 (5)
- U/Rule 32(7)
Shall be deemed to be NIL.

CONTD…
• The rate of exchange for determination of
value of taxable goods or services or both –
U/Rule 34
• Shall be the applicable reference rate for that
currency as determined by RBI on the date
when POT arises in respect of such supply in
terms of S.12 or 13 of this act.

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