# Value of Supply — Overview & Transaction Value [Section 15(1)]
## Why this matters
GST is charged on an ad-valorem basis — meaning, as a percentage of the value of supply (VoS). So before you can compute tax, you must determine the value on which the rate is applied.
> Core formula: Tax Amount = Value of Supply × Rate of Tax
The rate is fixed by the Government; the value is what we determine using Section 15.
## Which method applies?
| Scenario | Method to determine Value of Supply |
|---|---|
| Supply made to an unrelated person AND price is the sole consideration | Transaction Value u/s 15(1), adjusted by inclusions u/s 15(2) and exclusions u/s 15(3) |
| Otherwise (related parties, or non-monetary consideration involved) | Prescribed Valuation Rules (not in syllabus) |
## Transaction Value [Section 15(1)]
The value of supply equals the transaction value, i.e., the price actually paid or payable for the supply, provided both conditions are met:
1. Supplier and recipient are not related persons, AND
2. Price is the sole consideration (full consideration is in money form).
If either condition fails, you cannot use transaction value — you must fall back to the prescribed rules.
## Reading the conditions carefully
- 'Related person' is a defined term — refer to the Supply under GST chapter.
- 'Sole consideration in money' means no barter, no exchange, no non-monetary perks tied to the deal.
- MRP, list price, or market price is irrelevant when transaction value applies — even a heavily discounted price is acceptable if the two conditions hold.