# Section 15(2) — What Must Be ADDED to Value of Supply

Even after fixing the transaction value under 15(1), five specific items must be added to arrive at the taxable value.

## The Five Inclusions — At a Glance

Clause	Inclusion
15(2)(a)	Taxes, duties, cesses, fees (other than GST laws) if charged separately
15(2)(b)	Amounts the supplier was liable to pay, but actually paid by recipient
15(2)(c)	Incidental expenses — commission, packing, pre-delivery charges
15(2)(d)	Interest / late fee / penalty for delayed payment
15(2)(e)	Subsidies directly linked to price (but NOT subsidies from CG/SG)

## 15(2)(a) — Other Taxes & Duties

Any tax, duty, cess, fee, or charge under any other law (not CGST/SGST/UTGST/IGST/Compensation Cess Acts) is included, if charged separately by the supplier.
Example: Municipal tax paid by supplier and separately billed → INCLUDED.
TCS under Income Tax Act, 1961: Not includible. Per CBIC Circular No. 76/50/2018-GST, TCS is an interim levy, not a tax — so it does not form part of taxable value for GST.

## 15(2)(b) — Payments by Recipient on Supplier's Behalf

If the supplier was contractually liable to pay a third party, but the recipient pays directly, the amount paid by recipient is added to value — even if not billed by supplier.

Condition: Supplier must be contractually liable AND payment must relate to the supply.

## 15(2)(c) — Incidental Expenses (Pre/At Delivery)

Any charge by the supplier in connection with the supply, at or before delivery, is included:

1. Commission paid to agent and recovered from buyer

2. Packing charges billed by supplier

3. Inspection / certification charges

4. Installation & testing charges at recipient's site

5. Weighment, loading, designing charges before/at supply

### Outward Freight & Transit Insurance — Watch the Terms

If supplier delivers to buyer's premises (with freight + insurance): It's a composite supply → freight & insurance form part of value; GST applies at rate of the principal goods.
If supply is ex-factory and buyer arranges & pays freight/insurance: NOT included in value of supply.

## 15(2)(d) — Interest, Late Fee, Penalty for Delayed Payment

The value includes any charge for delay in payment of consideration.
Time of supply for such interest/late fee = date of receipt by supplier.
Tax rate applied = same rate as the main supply (since it adds to that supply's value).

## 15(2)(e) — Price-Linked Subsidies

Subsidy directly linked to price of goods/services → INCLUDED in value.
Subsidy from Central Government / State Government → NOT included.
Blanket subsidy / donation (not linked to price) → NOT included.
Explanation: Amount of subsidy is added in the value of supply of the supplier who receives the subsidy.

Worked example

### Example 1

Section 15(2)(b) — Third-Party Payment: Grand Biz contracts with vendors (water, soft drinks, audio, projector, catering, flowers) for a dealers' meet organised for ABC Co. Grand Biz is contractually liable to pay all vendors. On delivery, ABC Co. directly pays the soft drinks vendor.

Answer: Even though Grand Biz did not bill ABC for soft drinks, the amount ABC paid directly is added to the value of supply by Grand Biz to ABC Co. (Grand Biz was contractually liable.)

### Example 2

Section 15(2)(d) — Interest on Delay: Supply value Rs. 2,000 with one-month free credit, interest @ 12% p.a. for delay. Buyer pays after 2 months.

Answer: Interest for 1 extra month = Rs. 2,000 × 12% × 1/12 = Rs. 20. Taxable value = Rs. 2,000 + Rs. 20 = Rs. 2,020 (exclusive of GST). GST is charged at the same rate as the main supply.

### Example 3

Section 15(2)(e) — Subsidy: A notebook is priced at Rs. 50. A subsidy of Rs. 30 reduces the buyer's effective cost.

If subsidy is from a company's CSR funds (non-government): Value remains Rs. 50 (subsidy added back since it's directly linked to price).
If subsidy is from CG/SG: Value = Rs. 20 (government subsidies excluded).

⚠️ Common exam mistakes

Adding TCS (Income Tax) to taxable value — TCS is specifically excluded per Circular 76/50/2018-GST.
Including outward freight in value when supply is ex-factory and buyer arranges transport on his own.
Treating every subsidy as includible — only price-linked, non-government subsidies are added.
Adding amounts paid by recipient to third parties when the SUPPLIER was not contractually liable for those payments.
Applying a different GST rate (or zero) to interest on delayed payment — it carries the same rate as the underlying supply.

Bare-Act text Section 15(2) · CGST Act, 2017 · click to expand

Sec 15(2): The value of supply shall include— (a) any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than this Act, SGST Act, UTGST Act and GST (Compensation to States) Act, if charged separately by the supplier; (b) any amount that supplier is liable to pay in relation to such supply but which has been incurred by the recipient of supply and not included in the price actually paid or payable for the goods or services or both; (c) incidental expenses, including commission and packing, charged by supplier to recipient of a supply and any amount charged for anything done by supplier in respect of the supply of goods/services/both at the time of, or before delivery of goods or supply of services; (d) interest/late fee/penalty for delayed payment of any consideration for any supply; and (e) subsidies directly linked to price excluding subsidies provided by CG and SG. Explanation: For the purposes of this sub-section, amount of subsidy shall be included in value of supply of supplier who receives the subsidy.

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Section 15(2) - Inclusions in Value of Supply

Worked example

⚠️ Common exam mistakes