Inclusions in Value of Supply [Section 15(2)]

# Inclusions in Value of Supply [Section 15(2)]

Even when transaction value applies, certain items must be added back to arrive at the final value of supply. Section 15(2) lists six categories.

## (1) Taxes other than GST

Any tax, duty, cess, fee, or charge under any law other than GST that is charged separately by the supplier — e.g., municipal tax, excise duty (in cases where it still applies), basic customs duty.

Important carve-out: TCS under the Income Tax Act is NOT included, because TCS is merely a mechanism to collect income tax, not a tax on the supply itself.

## (2) Payments made by recipient to a 3rd party

If the supplier was contractually liable to provide a part of the supply, but the recipient paid that part directly to a third party, the amount paid to the third party is added to the value of supply (it was already the supplier's obligation, just settled directly).

Only add it if it has NOT already been included in the price.

## (3) Incidental expenses

Packing, commission, loading, weighment, installation, testing — anything incidental that the supplier charges from the recipient.

## (4) Pre-delivery work done by supplier

Any amount charged for anything done by the supplier at the time of, or before, delivery — customisation, modification, inspection charges, etc.

## (5) Interest, late fee, or penalty for delayed payment

Four rules:

• Include only if actually recovered (waived amount is excluded).
• Treated as composite supply — same tax rate as the main supply.
• Time of supply = period in which it is actually received by the supplier.
• Generally inclusive of GST, unless the question says otherwise.

Back-calculation when inclusive of GST:

$$\text{Value} = \frac{\text{Interest/late fee/penalty}}{100 + \text{tax rate}} \times 100$$

## Transportation cost — special note

FOR basis = Free On Road / Free On Rail — supplier delivers to destination.

Ex-factory basis = goods handed over at factory gate; recipient arranges transport.

## (6) Subsidy linked to price

Subsidy is added to value of supply only if BOTH:

• Subsidy is provided by anyone other than Central or State Government, AND
• Subsidy is directly linked to the price.

Subsidies for setting up a plant or promoting entrepreneurship are not price-linked and therefore not added.

### Treatment of price-linked subsidy in problems

Case A — Question says 'price is net of subsidy' (or just mentions subsidy received with no further detail):

Case B — Question says 'price is exclusive of / without adjusting subsidy':

## Taxability of Interest charged by a Del-Credere Agent (DCA)

A DCA guarantees timely payment to the principal and may charge interest to the buyer for delays. Tax treatment depends on whether the principal–DCA arrangement is a Schedule-I transaction (i.e., DCA issues invoice in his own name).