Example: - 13

A entered into contract with B for Supply of goods valued at Rs. 112000. The contract specifies amount for sale of goods and in addition also provides for delivery at the premises of B. A hired a transporter and also obtained transit insurance. Amount charged by transporter was Rs.1500 including transit insurance. What would be the value of goods for the purpose of GST.

Ans. When goods are supplied with reference to the recipient’s place, then price paid or payable for goods includes expenditure incurred on freight and insurance expenses as incidental expense in relation to sale of goods. In this case, place of removal shall be the premises of B.  Incidental expense relating to transit and insurance expense form part of value for the purpose of charging tax under GST i.e. Rs. 112000+ Rs 1500 = Rs. 113500.