# Value of Supply: Section 15(1) - Transaction Value
## Why Valuation Matters
GST is an ad-valorem tax — meaning it is calculated as a percentage of the value of supply. Without a correctly determined value, you cannot compute CGST, SGST/UTGST or IGST liability. Section 15 of the CGST Act read with Chapter IV of the CGST Rules, 2017 lays down the rules for valuation.
## Scope of Section 15 — A Quick Map
| Sub-section | Covers |
|---|---|
| 15(1) | Supplies for money only between unrelated persons |
| 15(4) | Non-monetary consideration, part-monetary/part-non-monetary, or related party supplies |
| 15(5) | Specified categories of goods/services notified by Government |
## The Core Rule — Section 15(1)
> Value of supply = Transaction Value = the price actually paid or payable for the supply,
> PROVIDED:
> 1. Supplier and recipient are not related, AND
> 2. Price is the sole consideration for the supply.
### Breaking Down "Price Actually Paid or Payable"
- It is the price for that specific supply being valued — not a market reference price.
- It includes:
- Amount already paid, plus
- Amount payable (i.e., the agreed price still due).
- It is not the wholesale market price or notional price.
## When Section 15(1) Does NOT Apply
Move to Section 15(4) (or 15(5) if notified) when any of these is true:
- Parties are related (definitions from Supply chapter apply).
- Consideration is not solely in money (e.g., barter, exchange).
- Consideration is partly non-monetary.
## Putting It Together — Decision Logic
1. Are parties related? → If YES, go to Rule 28 via Sec 15(4).
2. Is price the sole consideration? → If NO, go to Sec 15(4).
3. If both NO → Transaction value = price paid/payable is the value.