Valuation and Exemptions
Currently, GST will be charged on the ‘transaction value’. Transaction value is the price actually paid(or payable) for the supply of goods/services between un-related parties (i.e., price is the sole consideration)
The value of supply under GST shall include:
- Any taxes, duties, cess, fees, and charges levied under any act, except GST. GST Compensation Cess will be excluded if charged separately by the supplier.
- Any amount that the supplier is liable to pay which has been incurred by the recipient and is not included in the price.
- The value will include all incidental expensesin relation to sale such as packing, commission etc.
- Subsidies linked to supply, except Government subsidies will be included.
- Interest/late fee/penalty for delayed payment of consideration will be included.
Exempt supplies comprise the following three types of supplies:
- Supplies taxable at a ‘NIL’ rate of tax* (0% tax);
- Supplies that are wholly or partially exempted from CGST or IGST, by way of a notification amending Section 11 of CGST Act or Section 6 of IGST Act;
- Non-taxable supplies as defined under Section 2(78) – supplies that are not taxable under the Act (For Example Alcoholic liquor for human consumption.
Central or the State Governments are empowered to grant exemptions from GST. Conditions are:
- Exemption should be in public interest
- By way of issue of notification
- Must be recommended by the GST Council
- Absolute exemption or conditional exemption may be for any goods and / or services of any specified description.
- Exemption by way of special order (not notification) may be granted exceptional circumstances.
- Registered person supplying the goods and / or services is not entitled to collect tax higher than the effective rate, where the supply enjoys an absolute exemption.
Types of Exemptions:
Absolute exemption: Exemption without any conditions.
Ex: Transmission or distribution of electricity by an electricity transmission or distribution utility, Services by Reserve Bank of India.
Conditional Exemption: Exemption subject to certain conditions.
Ex: Services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purposes, having declared tariff of a unit of accommodation less than ` 1000/- per day”.
Conditional or partial exemption:
Intra-State supplies of goods and/or services received from an unregistered person by a registered person is exempted from payment of tax under reverse charge provided the aggregate value of such supplies received by a registered person from all or any of the suppliers does not exceed ` 5000/- in a day.