M/s FRY Ltd. registered in the state of Rajasthan sold one Machine to M/s. BCG Ltd registered in the state of Rajasthan in the month of May, 2025,…

CA Intermediate · Taxation · PYQS · January 2026
M/s FRY Ltd. registered in the state of Rajasthan sold one Machine to M/s. BCG Ltd registered in the state of Rajasthan in the month of May, 2025, at contract price of 8,50,000. (Exclusive of taxes and discount). CGST and SGST (6% each) is chargeable on the machine The following amounts have been charged from M/s BCG Limited in addition to the Contract Price:- S. No. Particulars Amount (₹) (i) Outward freight Charges (Contract was to deliver machine at BGC Ltd.'s factory i.e. F.O.R. contract) 42,000 Additional information: (i) M/s FRY Ltd offers trade discount of 3% on the contract price of 8,50,000 which was duly recorded in invoice. (ii) M/s FRY Ltd normally gives an interest-free credit period of 15 days for payment from the date of issue of invoice failing which the interest @1.50% per month or part thereof shall be charged. The payment was made after 18 days from the date of issue of invoice. However, M/s FRY Ltd waived the interest payable for delay. (iii) M/s FRY Ltd. received following subsidies directly linked to the price, (a) ₹ 60,000 from one non-government organization (NGO) on sale of such machine. (b) ₹ 80,000 from the State Government on sale of such machine. Both the subsidies were not deducted while arriving the contract price of 8,50,000 Compute the Taxable Value of supply as per provision of GST laws considering that the price is the sole consideration for the supply and both parties are unrelated to each other Note: Correct legal provision for each item should form part of your answer.

Suggested Answer and Working Notes:

(b) Computation of taxable value of supply Particulars Taxable value (₹) Contract price of machinery 8,50,000 Outward freight charges for delivery of the machine [Since the supplier agrees to deliver the goods at the buyer's premises and arranges for transport, it is a composite supply, the principal supply being the supply of goods. Thus, freight charges are includible.] 42,000 Trade discount [Deductible since discount is given at the time of supply and is recorded in invoice] (25,500) Interest for delayed payment [Not includible since the same is waived off.] - Price linked subsidy received from an NGO [Since the subsidy is received from a non-Government body and directly linked to the supply, the same is includible in the value.] - Price linked subsidy received from State Government [Since the subsidy is received from the State Government, the same is not includible in the value of supply, and hence, deducted.] (80,000) Taxable value 7,86,500

Topics: Paper 3B: Goods and Services Tax

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