# Section 15(2) – Compulsory Inclusions in Value of Supply

Even when invoice value is the starting point, Section 15(2) lists items that MUST be added to value if not already included.

## 15(2)(a) – Other Taxes / Duties / Cesses / Fees / Charges

Included if:

Levied under any law for the time being in force, other than CGST, SGST, UTGST, IGST, and GST Compensation Cess; AND
Charged separately by the supplier.

Example: Municipal tax separately charged by supplier on invoice — added.

### Special: TCS under Income-tax Act

Per CBIC Circular No. 76/50/2018-GST, TCS under the Income-tax Act, 1961 is NOT included in taxable value for GST — it is an interim levy, not a tax in substance.

## 15(2)(b) – Third-Party Payments Made by Recipient on Behalf of Supplier

Added to value when:

The supplier is contractually liable to make such payment, AND
Recipient pays the third party directly on behalf of the supplier, AND
Such amount is not already included in the price charged.

### Test

Who is contractually liable to the third party? If supplier → recipient's direct payment is added to value. If recipient → not added.

## 15(2)(c) – Incidental Expenses

Added: commission, packing, any amount charged by supplier for anything done in respect of supply at or before delivery of goods / supply of services.

### Examples to Add

1. Commission paid to an agent and recovered from buyer

2. Packing charges billed to recipient

3. Inspection / certification charges before/at time of supply, billed to recipient

4. Installation / testing charges at recipient's site

5. Weighment / loading / designing charges before/at supply, billed to recipient

### Outward Freight & Transit Insurance

If supplier delivers to buyer's premises under contract → composite supply → freight + insurance form part of value; GST at rate applicable to principal goods.
If supply is on ex-factory basis and buyer separately pays freight/insurance → NOT added to supplier's value.

## 15(2)(d) – Interest / Late Fee / Penalty for Delayed Payment

Charges for delay in payment of consideration are part of value of supply.
ToS for these additions: Date supplier receives the amount (Sec 12(6) / 13(6)).
Rate: same GST rate as the main supply (since they form part of value of supply).

## 15(2)(e) – Subsidies Directly Linked to Price

Subsidies directly linked to the price are included in value.
Excluded: subsidies provided by Central Government (CG) and State Government (SG).
Explanation: The subsidy amount is included in the value of supply of the supplier who receives the subsidy.

### Logic

Non-government subsidies effectively top-up consideration; therefore added. CG/SG subsidies are a policy support and excluded.

Worked example

### Example 1

Third-party payment (15(2)(b)): Grand Biz organises a dealer meet for ABC Co. and is contractually liable to pay vendors for water, soft drinks, AV, catering, flowers. ABC Co. directly pays the soft-drinks vendor on delivery. Even though Grand Biz did not bill that amount → it is added to value of supply by Grand Biz to ABC Co. for GST.

### Example 2

Interest on delayed payment (15(2)(d)): Supply of ₹2,000 with one-month free credit and 12% p.a. interest thereafter. Buyer pays after 2 months. Interest for 1 month = ₹20. Value of supply = ₹2,020 (excl. GST). GST applies to ₹2,020 at the rate applicable to the main supply.

### Example 3

Composite freight: A Ltd. agrees to deliver machinery worth ₹10,00,000 to buyer's site; freight ₹50,000 and transit insurance ₹10,000 separately shown on invoice. Composite supply → Value = ₹10,60,000; GST at rate applicable to machinery on entire amount.

### Example 4

Ex-factory freight: Buyer arranges and pays for transport from factory gate. Freight NOT added to supplier's value of supply.

### Example 5

Municipal tax (15(2)(a)): Supplier charges ₹500 municipal tax separately on invoice. ₹500 added to value of supply.

### Example 6

TCS exclusion: Invoice ₹10,00,000 + 0.1% TCS = ₹1,000. TCS of ₹1,000 NOT included in taxable value (per Circular 76/50/2018).

⚠️ Common exam mistakes

Adding TCS under the Income-tax Act to GST taxable value — explicitly excluded by Circular 76/50/2018-GST.
Adding third-party payments under 15(2)(b) without checking whether the supplier was contractually liable — if the recipient is liable, no addition.
Forgetting that outward freight on ex-factory sales (where buyer arranges) is NOT added to value.
Applying a different GST rate to interest/late fee — it takes the same rate as the main supply.
Adding all subsidies — CG and SG subsidies are excluded; only non-government, price-linked subsidies are added.
Including CGST/SGST/UTGST/IGST/GST Compensation Cess under 15(2)(a) — only OTHER taxes are added (and only if charged separately).

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

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, the State Goods and Services Tax Act, the Union Territory Goods and Services Tax Act and the Goods and Services Tax (Compensation to States) Act, if charged separately by the supplier; (b) any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the 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 the supplier to the recipient of a supply and any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the time of, or before delivery of goods or supply of services; (d) interest or late fee or penalty for delayed payment of any consideration for any supply; and (e) subsidies directly linked to the price excluding subsidies provided by the Central Government and State Governments. Explanation.— For the purposes of this sub-section, the amount of subsidy shall be included in the value of supply of the supplier who receives the subsidy.

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Section 15(2) – Inclusions in Value of Supply (Taxes, Third-party Payments, Incidental Expenses, Interest, Subsidies)

Worked example

⚠️ Common exam mistakes