Value of supply of goods or services or both between distinct or related persons under GST

Greed – The Normal Nature of Human. Never gets satisfied, Hate Taxes, To avoid taxes apply all possible means, by diverting profits into other entities was also such an innovation by a smart business person. But Govt is also smart. Set different rules for transactions with Related Parties. Earlier it was only part of Direct Taxes as Transfer Pricing Rules, but later it also attracted Indirect Tax Officers. In VAT Assessment & Special Audits, details of transactions with related parties were specifically asked, For Custom Duty – Set Special Valuation Branch. So How GST could be an exception. Separate Valuation Rules provided for Valuation for supply between related parties.

Nothing New Except Two things amazed me. Adding Distinct Parties (Own Branch in Same or Other State with different registrations) and treating Employers and Employees to be related parties. It means few companies run by some kind owners who supply goods or services to employees free of cost or at heavy discount along with other facilities have to pay tax on differential value. Only relief is Section 7 (Schedule I) that says, “Provided that gifts not exceeding fifty thousand rupees in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both.”

Here is my small write up on Valuation Rules applicable for Distinct or/& Related Parties. Thanks.

[GstSutras12] #SukhF_GST