GST Updates by CA Rahul Gupta

Rules Rule 32 of CGST Rules i.e. Determination of Value in Certain Supplies i.e (a) Purchase or Sale of Foreign Currencies (b) Booking of Tickets by Air (c) Life Insurance Policies (d) Second Hand Goods (e) Value of Tocken, Coupon or Voucher

Financial Year: 2017

Rule 32 of CGST Rules

Determination of value in respect of certain supplies

(1) Notwithstanding anything contained in the provisions of this Chapter, the value in respect of supplies specified below shall,

at the option of the supplier,

be determined in the manner provided hereinafter.

(2) The value of supply of services in relation to the

purchase or sale of foreign currency, including money changing,

shall be determined by the supplier of services in the following manner, namely:-

(a) for a currency, when exchanged from, or to, Indian Rupees,

the value shall be equal to the

difference in the buying rate or the selling rate, as the case may be,

and the Reserve Bank of India reference rate for that currency at that time,

multiplied by the total units of currency.

Case	Valuation
Currency Sold by Customer	(Selling Rate-RBI Reference Rate)*Total Units
Currency Purchased by Customer	(Purchase Rate-RBI Reference Rate)*Total Units

(Money Changer profit is on both sides whether transaction is for sale of foreign currency or purchase of foreign currency and RBI reference rate is cost for the money exchanger)

Provided that in case where the

Reserve Bank of India reference rate for a currency

is not available,

the value shall be

one per cent of the gross amount of Indian Rupees

provided or received

by the person changing the money

Provided further that in case where

neither of the currencies exchanged is Indian Rupees,

the value shall be equal to

one per cent of the lesser of the two amounts

the person changing the money would have received

by converting any of the two currencies into Indian Rupee on that day

at the reference rate provided by the Reserve Bank of India.

Provided also that a person supplying the services

may exercise the option to ascertain the value in terms of clause (b) for a financial year

and such option shall not be withdrawn during the remaining part of that financial year.

(b) at the option of the supplier of services,

the value in relation to the supply of foreign currency,

including money changing, shall be deemed to be

(i) one per cent of the gross amount of currency exchanged

for an amount up to one lakh rupees,

subject to a minimum amount of two hundred and fifty rupees;

(ii) one thousand rupees and

half of a per cent of the gross amount of currency exchanged

for an amount exceeding one lakh rupees and up to ten lakh rupees; and

(iii) five thousand and five hundred rupees

and one tenth of a per cent of the gross amount of currency exchanged

for an amount exceeding ten lakh rupees,

subject to a maximum amount of sixty thousand rupees.

Slab	Valuation	Minimum Valuation	Maximum Valuation
0-1 Lakhs	250 Rs + 1% of Gross Amount of Currency Exchanged	250 Rs	100000*1%= 1000 Rs
1 Lakhs-10 Lakhs	1000 Rs + 0.5% of Gross Amount of Currency Exchanged Exceeding 1,00,000	1000 Rs	1000 Rs + 900000*0.5%= 5500 Rs
>10,00,000	5500 Rs + 1/10th of Gross Amount of Currency Exchanged Exceeding 10,00,000	5500 Rs	>(X-10,00,000)*1/10+5500 Rs

(3) The value of the supply of services in relation to

booking of tickets for travel by air

provided by an air travel agent

shall be deemed to be an amount calculated at the rate of

five percent of the basic fare in the case of domestic bookings,

and at the rate of

ten per cent of the basic fare in the case of international bookings

of passage for travel by air.

Air Travel Ticket	Valuation
Domestic Bookings	5% of Basic Fare
International Bookings	10% of Basic Fare

Explanation.- For the purposes of this sub-rule, the expression

basic fare means that part of the air fare

on which commission is normally paid

to the air travel agent

by the airlines.

(4)The value of supply of services in relation to life insurance business shall be,-

(a) the gross premium charged from a policy holder

reduced by the amount allocated for investment,

or savings on behalf of the policy holder,

if such an amount is intimated to the policy holder

at the time of supply of service;

(b) in case of single premium annuity policies other than (a),

ten per cent of single premium charged from the policy holder; or

twenty five per cent of the premium charged from the policy holder in the first year

and twelve and a half per cent of the premium charged from the policy holder in subsequent years

Provided that nothing contained in this sub-rule shall apply

where the entire premium paid by the policy holder

is only towards the risk cover in life insurance.

Life Insurance	Valuation
Insurance	(Gross premium-Investment Amount in premium)
Single Premium Policy	10% of Single Premium
All Other Cases	25% of 1st Year Premium and 12.5% of Premium in Subsequent Years

(5) Where a taxable supply is provided by a person

dealing in buying and selling of second hand goods i.e.,

used goods as such or after such minor processing

which does not change the nature of the goods

and where

no input tax credit has been availed on the purchase of such goods,

the value of supply shall be the

difference between the selling price and the purchase price

and where the value of such supply is negative, it shall be ignored.

Particulars	Valuation	Remarks
Input Tax Credit Not Taken at the time of Purchase	Selling Price-Purchase Price	If Value Comes Negative, Ignore
Input Tax Credit Taken at the time of Purchase	Selling Price-Purchase Price	GST Input needs to be taken in 60 Months i.e. 20 Quarters i.e. 5 Years or we can say 5% per quarter. (5%*20 Quarters=100%). GST Input needs to be taken only for the quarters asset has been put to use by the registered person. If asset has been sold before 5 years we need to calculate quarters and reverse GST input.
Goods Repossessed from defaulting borrower who is not registered in GST	Purchase Price-5% of value of asset (Multiply By Quarters between date of purchase and date of disposal)	GST Act considers useful life of asset as 60 Months or 5 Years or 20 Quarters

Provided that the purchase value of goods repossessed from a defaulting borrower,

who is not registered,

for the purpose of recovery of a loan or debt

shall be deemed to be the purchase price of such goods

by the defaulting borrower

reduced by five percentage points for every quarter or part thereof,

between the date of purchase and the date of disposal

by the person making such repossession.

(6) The value of a token, or a voucher, or a coupon, or a stamp (other than postage stamp)

which is redeemable against a supply of goods or services or both

shall be equal to the money value of the goods or services or both

redeemable against such token, voucher, coupon, or stamp.

Thanks

CA Rahul Gupta