# What Is the Value of Supply Under Section 15 of the CGST Act?

**Category:** GST | **Published:** 2026-06-26 | **Last reviewed:** 2026-06-26 | **Author:** Mrs. Swapna Patel

Value of supply is the amount GST is levied on. Under Section 15(1) of the CGST Act it is the transaction value, the price actually paid or payable for the supply, where the supplier and recipient are not related and the price is the sole consideration. Section 15(2) lists what must be added; Section 15(3) lists the discounts that may be deducted. Where transaction value cannot apply, the valuation Rules 27 to 35 step in.

> **Myth:** GST is charged on the price printed in the “amount” box of the invoice, nothing more.
>
> **Fact:** [Section 15(2) of the CGST Act](https://cbic-gst.gov.in/) adds packing, commission, incidental charges, and interest for late payment into the value of supply. The taxable value can be higher than the bare product price.

## What is the value of supply under GST?

> **Short answer:** The value of supply is the figure GST is charged on. Under [Section 15(1) of the CGST Act](https://cbic-gst.gov.in/), it is the transaction value, the price actually paid or payable, when the parties are unrelated and price is the only consideration.

- Transaction value is the default. GST applies the relevant rate to this value, so getting it wrong understates or overstates tax and the buyer’s input tax credit.
- “Sole consideration” means money is the only thing changing hands. A part-exchange or barter breaks this test, and the valuation rules take over.
- “Related persons” covers group companies, employer and employee, and others defined in the Act. Between related parties the transaction value is set aside.
- The value is per supply, and it is the value before GST is added, not after.

## What must be added to the value under Section 15(2)?

> **Short answer:** Section 15(2) adds charges that sit alongside the price: taxes other than GST, third-party costs the buyer paid on the supplier’s behalf, incidental expenses, and interest or late fees for delayed payment.

| Section 15(2) clause | Added to the value | Example |
| --- | --- | --- |
| 15(2)(a) | Taxes, duties, cesses other than GST, if charged separately | A state levy billed on the same invoice |
| 15(2)(b) | Amounts the supplier was liable to pay but the recipient paid | A freight bill the buyer settled directly |
| 15(2)(c) | Incidental expenses: packing, commission, anything charged at or before delivery | Packing and forwarding charges on the invoice |
| 15(2)(d) | Interest, late fee, or penalty for delayed payment | A 2% monthly charge on an overdue invoice |
| 15(2)(e) | Subsidies directly linked to the price, excluding central and state government subsidies | A manufacturer’s price-support subsidy |

*Source: [Section 15(2), CGST Act 2017](https://cbic-gst.gov.in/). Government subsidies are excluded; only price-linked non-government subsidies are added.*

## Which discounts can you deduct under Section 15(3)?

> **Short answer:** Discounts recorded on the invoice at the time of supply are deducted from the value. A post-supply discount is deductible only if it was agreed before the supply, linked to specific invoices, and the buyer reverses the matching ITC.

- Pre-supply discount: a trade or cash discount shown on the face of the invoice reduces the taxable value directly.
- Post-supply discount: deductible only when all three conditions hold, an agreement before supply, a link to specific invoices, and ITC reversal by the recipient.
- Why it matters: a year-end volume rebate that was not agreed up front cannot reduce the value, so GST stays charged on the original amount.
- The value you settle here is the figure printed on the [GST tax invoice](/answers/gst-tax-invoice-fields-section-31-rule-46) as the taxable value under Rule 46(k).

**[Generate an invoice that states taxable value and GST correctly](https://hrareceipt.in/pakka-bill)**

## What happens when the transaction value cannot be used?

> **Short answer:** Where the parties are related or price is not the sole consideration, [Section 15(4) and 15(5)](https://cbic-gst.gov.in/) push valuation to Rules 27 to 35, which use open market value or a cost-plus method.

- Rule 27 covers consideration not wholly in money, using open market value first.
- Rule 28 covers supplies between related or distinct persons, again starting from open market value.
- Rules 30 and 31 fall back to cost plus 10% or a reasonable means consistent with the Act.
- These rules are the exception. For an arm’s-length sale at a money price, Section 15(1) transaction value still governs.

## Primary sources

- [Section 15, Central Goods and Services Tax Act 2017 — CBIC](https://cbic-gst.gov.in/) — Value of taxable supply: transaction value, inclusions, and discount exclusions.
- [Rules 27 to 35, Central Goods and Services Tax Rules 2017 — CBIC](https://cbic-gst.gov.in/pdf/CGST-Rules-Sept-2023.pdf) — Valuation where the transaction value cannot be used, including related-party and open-market-value rules.
- [Section 15(3), CGST Act — discounts — CBIC](https://cbic-gst.gov.in/) — Conditions for deducting pre-supply and post-supply discounts from the value.

## Related

- [What fields must a GST tax invoice carry under Section 31 and Rule 46?](https://hrareceipt.in/answers/gst-tax-invoice-fields-section-31-rule-46)
- [What are the GST rate slabs after the GST 2.0 reform?](https://hrareceipt.in/answers/gst-rate-slabs-after-gst-2-0-reform)
- [Composite vs mixed supply under Section 8 of the CGST Act](https://hrareceipt.in/answers/composite-vs-mixed-supply-section-8-gst)
- [What is GSTR-2B, and why does it decide your input tax credit?](https://hrareceipt.in/answers/what-is-gstr-2b-auto-drafted-itc-statement)

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*Source: [What Is the Value of Supply Under Section 15 of the CGST Act?](https://hrareceipt.in/answers/what-is-value-of-supply-section-15-gst) — HRAReceipt.in*
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