LSP Ltd., a registered supplier, sold a machine to Balwant Ltd. It provides the following information in this regard: S. No. Particulars Amount (₹)…
CA Intermediate · Taxation · MTP · May 2024
LSP Ltd., a registered supplier, sold a machine to Balwant Ltd. It provides the following information in this regard: S. No. Particulars Amount (₹) (i) Price of the machine [excluding taxes and other charges mentioned at S. Nos. (ii) and (iii)] 20,000 (ii) Third party inspection charges [Such charges were payable by LSP Ltd. but the same have been directly paid by Balwant Ltd. to the inspection agency. These charges were not recorded in the invoice issued by LSP Ltd.] 6,000 (iii) Freight charges for delivery of the machine [LSP Ltd. has agreed to deliver the goods at Balwant Ltd.'s premises] 1,000 (iv) Subsidy received from the State Government on sale of machine under Skill Development Programme [Subsidy is directly linked to the price] 5,000 (v) Discount of 2% is offered to Balwant Ltd. on the price mentioned at S. No. (i) above and recorded in the invoice Note: Price of the machine is net of the subsidy received. Determine the value of taxable supply made by LSP Ltd. to Balwant Ltd.
Suggested Answer and Working Notes:
Computation of value of taxable supply made by M/s. LSP to Balwant Ltd. Particulars Amount (₹) Price of the machine [Since the price linked subsidy is received from the State Government, the same is not includible in the value of supply] 20,000 Third party inspection charges [Any amount that the supplier is liable to pay in relation to the supply but has been incurred by the recipient and not included in the price actually paid or payable for the goods, is includible in the value of supply] 6,000 Freight charges for delivery of the machine [Since arranging freight is the liability of supplier, it is a case of composite supply and thus, freight charges are added in the value of principal supply.] 1,000 Total 27,000 Less: Discount @ 2% on 20,000 being price charged to Balwant Ltd. [Discount given before or at the time of supply if duly recorded in the invoice is deductible from the value of supply] 400 Value of taxable supply 26,600
Topics: Paper 3B: Goods and Services Tax
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