Taxation - Income TaxQuestion 5638 of 146
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15. Smita Limited made an outward supply of garments at an agreed price of ` 5,00,000. The company charged ‘Go Green Cess’ levied by Local municipal corporation amounting to ` 10,000 for this supply. As the customer made payment within 3 days from the date of delivery, Smita Limited provide a discount of ` 5,000 separately as a customer friendly measure, even though no prior agreement was made on discount. Value of Supply made by Smita Limited u/s 15 is ` ______________

Options

A5,05,000
B5,10,000
C5,00,000 (d) 5,15,000 (2 Marks)
D
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Correct Answer

Option B5,10,000

All Options:

  • A5,05,000
  • B5,10,000
  • C5,00,000 (d) 5,15,000 (2 Marks)
  • D

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Detailed Solution & Explanation

Correct Answer: Option **B** Explanation: Under Section 15 of the CGST Act, 2017, the value of a supply is determined as follows:

1. **Inclusion of taxes, cesses, etc. u/s 15(2)(a):** Any taxes, duties, cesses, fees, and charges levied under any law for the time being in force, other than CGST, SGST, UTGST, and IGST, if charged separately by the supplier, must be included in the value of supply. Thus, the 'Go Green Cess' of ₹ 10,000 levied by the local municipal corporation is included.

2. **Treatment of discount u/s 15(3)(b):** A post-supply discount is allowed as a deduction from the value of supply only if it is established in terms of an agreement entered into at or before the time of such supply and is specifically linked to the relevant invoice, and the recipient has reversed the input tax credit attributable to such discount. Since no prior agreement was made in this case, the discount of ₹ 5,000 cannot be deducted.

Therefore, the value of supply is:
Value of Supply=Agreed Price+Municipal Cess\text{Value of Supply} = \text{Agreed Price} + \text{Municipal Cess}
Value of Supply=5,00,000+10,000=5,10,000\text{Value of Supply} = ₹ 5,00,000 + ₹ 10,000 = ₹ 5,10,000

Hence, **Option B** is the correct answer.

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