Value vs. Consideration

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Prash CoC1

83 Points Joined July 2017

Dear experts

Kindly let me know the difference between consideration towards supply and Value of supply.

I see a contrast among both.

S. 7 of CGST says Supply for consideration is Taxable. In other terms what if the supply is not for consideration?

S. 15 r/w Valuation rules lays procedure to determine value in case supply is made for no consideration. This says Market value shall be considered to levy gst, which override the basis of Charging Provision S. 7.

Your help is highly appreciated.

Thanks for your time.

Replies (3)

Karan Batra

Creator: TheProTalks

2325 Points Joined January 2016

Please don't get confused, ok let me explain you with a quote explaining Consideration which is "quod pro quo " which means something in return.

Now if you get something in return for supply made then you will be subject to GST but if nothing is returned for your supply then why should Tax be levied upon you. Have a look at this article which will help you understand in detail the provisions on Supply made Free of Consideration

Link:/articles/free-supply-treatment-under-gst-provisions-30463.asp

Section 7 provides for Free of consideration.

With what I can understand that Section 15 is in respect of Supply made and there WAS consideration, but it's just that the consideration was not given in monetory terms thus valuation rules comes into place to compute a as per law Fair consideration or you can say Transaction value, I used the term Transaction but please understand that in case of Non-monetory consideration their might not be a transaction made as value toh pta hi nhi hogi in monetory terms ya disclose nhi ki hogi thus Valuation rules comes into place.

Prash CoC1

83 Points Joined July 2017

Thanks for the reply.

What I understood is, Consideration can either be monetary or non monetary. But, to call it as a supply, there should be some consideration.

If such consideration is in monetary terms, then there is no issue.

If the consideration is in non monetary, then S. 15 and Valuation rues aids in determined Value.

Correct me if I'm wrong based on your reply.
Thanks for your time.

Karan Batra

Creator: TheProTalks

2325 Points Joined January 2016

Yeah conceptually that's what I said, However I am not sure about the section numbers numbers exactly, so I'll get back to you after looking into the act once