GST value of supply under section 15 explained
How the value of a taxable supply is determined under section 15 of the CGST Act: the transaction value rule, what is included such as incidental charges and interest for late payment, and what discounts are excluded.
In this guide
Section 15 of the CGST Act sets the value on which GST is charged. The value of a supply is the transaction value, the price actually paid or payable, where the supplier and recipient are not related and price is the sole consideration. It includes taxes other than GST, amounts the recipient is liable to pay but the supplier has paid, incidental expenses like packing and commission, and interest or late fees for delayed payment. A discount is excluded if it is recorded on the invoice, or agreed before the supply and linked to invoices with reversal of the related input tax credit.
What does section 15 decide?
Section 15 of the CGST Act decides the value on which GST is charged. Section 15 sets the transaction value as the default, then lists what to add to it and what to leave out.
The rate of tax applies to this value, so getting the value right matters as much as getting the rate right. A charge left out or a discount wrongly deducted changes the tax due.
What is transaction value?
Transaction value is the price actually paid or payable for the supply. It is the default value under section 15 where two conditions hold: the supplier and recipient are not related, and the price is the sole consideration for the supply.
When either condition fails, transaction value does not apply and the value is worked out under the valuation rules instead. For most ordinary sales between unrelated parties, the price on the invoice is the starting value.
What is included in the value?
Section 15 lists specific inclusions. Each is added to the transaction value before tax is computed.
| Inclusion | Note |
|---|---|
| Taxes other than GST | Duties, cesses, fees under any other law |
| Supplier liability paid by recipient | Amount the supplier owed but the recipient paid |
| Incidental expenses | Packing, commission, and similar charges |
| Price-linked subsidies | Excludes central and state government subsidies |
| Interest or late fee | For delayed payment of the consideration |
How are discounts treated?
A discount reduces the value only when it meets the conditions in section 15. When it does not, the full pre-discount price stays in the value.
A discount given before or at the time of supply is excluded if it is recorded in the invoice. A discount given after the supply is excluded only if it was agreed before or at the time of supply, can be linked to the relevant invoices, and the recipient reverses the input tax credit that relates to it.
What if the parties are related?
When the supplier and recipient are related, transaction value does not apply, because the price may not reflect an open dealing. The value is then set under the valuation rules made under section 15.
Those rules provide methods in order, such as the open market value of the supply, the value of a like supply, or a cost-based or residual method. The same applies when the price is not the sole consideration for the supply.
How do I compute the value?
- Check the parties are unrelated and price is the sole consideration.
- Take the price actually paid or payable as the base.
- Add taxes other than GST, incidental charges, and included subsidies.
- Add any interest or late fee for delayed payment when received.
- Deduct a discount only if it meets the invoice or pre-agreement test.
Where do businesses go wrong?
- Deducting a post-supply discount without a prior agreement or ITC reversal.
- Leaving out packing or commission charged to the customer.
- Forgetting interest or late fees on delayed payment.
- Adding a government subsidy that section 15 excludes.
- Using transaction value between related parties.
Where are the valuation rules published?
Valuation sits in section 15 of the CGST Act, with the detailed methods in the valuation rules made under it. The timing of when tax falls due is in section 12 for goods and section 13 for services. For where a supply is taxed, read our GST place of supply guide. Complied AI keeps CBIC / GST updates in one feed so you can open a rule change and read section 15 next to it.
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Common questions
What is the value of supply under GST?
Under section 15 of the CGST Act, the value of a supply is the transaction value, meaning the price actually paid or payable for the supply. This applies where the supplier and recipient are not related and the price is the sole consideration for the supply. GST is then charged on this value.
What is included in the value of supply?
Section 15 includes any taxes, duties, cesses, fees, and charges other than GST itself, any amount the supplier is liable to pay but which the recipient has incurred, incidental expenses such as packing and commission charged by the supplier, subsidies linked to the price except government subsidies, and interest, late fee, or penalty for delayed payment of consideration.
Is a discount deducted from the value of supply?
A discount is excluded from the value if it is given before or at the time of supply and recorded in the invoice. A post-supply discount is excluded only if it was agreed before or at the time of supply, is linked to relevant invoices, and the recipient reverses the input tax credit attributable to it.
Does GST value include other taxes charged on the invoice?
Yes. Any tax, duty, cess, or fee charged under any law other than the GST Acts forms part of the value of supply under section 15. So a levy like a state duty charged on the supply is added to the value on which GST is computed, but GST itself is not.
Is interest for late payment part of the value of supply?
Yes. Interest, a late fee, or a penalty charged for delayed payment of the consideration is included in the value of supply under section 15. The time of supply for that additional amount is the date the supplier receives it, so tax on it falls due when it is received.
How is value determined when the price is not the sole consideration?
When price is not the sole consideration, or the supplier and recipient are related, transaction value does not apply. The value is then determined under the valuation rules made under section 15, which set out methods such as open market value or the value of like supplies.
Are government subsidies added to the value of supply?
No. A subsidy directly linked to the price is added to the value of supply, but subsidies provided by the central or a state government are excluded. So a price-linked subsidy from a non-government source increases the value, while a government subsidy does not.
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How this guide was prepared
This guide is published by the Complied AI research desk. Its source list and stated position were checked against the official records shown below on 19 September 2026.
Automation, including AI, may assist research, drafting and structure. It does not replace the official record or amount to an independent professional review. Read our editorial standards and corrections policy.
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