Taxable value under GST

Items that must be included

Section 15(2) says the value of supply includes:

• Taxes, duties, cesses, fees and charges under any law other than the GST laws, if charged separately by the supplier.
• Any amount the supplier is liable to pay but which the recipient pays, and which is not included in the price.
• Incidental expenses, including commission and packing, charged by the supplier before or at the time of delivery.
• Interest, late fee or penalty for delayed payment of consideration.
• Subsidies directly linked to the price, except subsidies from the Central and State Governments.

Discounts

Under Section 15(3), a discount given before or at the time of supply and recorded in the invoice is excluded from value. A discount given after the supply is excluded only if it was agreed before or at the time of supply, linked to specific invoices, and supported by a credit note, with the recipient reversing the related input tax credit, as the law now requires.

Discounts not meeting these conditions do not reduce the taxable value, though they may be handled as commercial credit notes without GST.

Common errors

Leaving out freight or packing billed separately, ignoring interest on late payment, and reducing value for year-end discounts that were not agreed in advance are frequent findings in audit. For related parties and special cases, Rules 27 to 35 apply instead of the plain transaction value.

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This guide explains the law in general terms as of October 2026. Time limits and requirements can depend on the facts of your case and on the notice you received.