IS GST APPLY WHEN SUBSIDY IS LINKED TO SUPPLY/PRICE???

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Section 15 of CGST Act,
specifically provides that
TRANSACTION VALUE SHALL INCLUDE
items which are specified in Clauses (a) to (e)

Clause (e) : describes subsidy provided in any form or manner
                    linked to the supply (Excluding Government Subsidy)
                    will also be included in Transaction Value.

Here in this clause: nothing is mentioned about who is providing the subsidy.

Hence,subsidy provided  by any Person in any FORM
            it shall also be included in transaction value.

IMPORTANT POINT IS: Subsidy shud be directly linked to the price.


EXAMPLE 1: What about Gas Subsidy as such subsidy is also related to supply of GAS                                       CYLINDERS??

  • The company is making supply of  gas cylinders
  • Supply of goods(gas cylinders) at fixed price and NOT at subsidized rate.
  • The amount of subsidy is directly credited to the Bank account of the customer and NOT RECEIVED BY THE PERSON WHO IS MAKING SUPPLY.
  • Hence, such gas subsidy shall not be included in transaction value or NO GST on Gas Subsidy and not linked to the supply.
EXAMPLE 2: So if investment subsidy is given by State Government/CG- It is also not taxable as such subsidy is also a Government Subsidy.
Normally, whenever the word "subsidy" arrise we normally linked it with Government coz subsidy is given for the benefit of community or area for their uplifting and as it is written in law subsidy from Government is excluded in GST.

Let say:  If a car service station is giving discount to the customers and car manufacturer is giving benefit to the service station to makeup for such,.then such amount is levy to GST. as this is linked to price and not provided by the Government.

Comments

  1. sakshid628June 25, 2019 at 12:12 AM

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