Section 15 decides the amount on which tax is charged. The starting point is the transaction value — the price actually paid or payable — where the parties are not related and price is the sole consideration. Additions, permitted discounts and the valuation rules for everything else follow.
Key points
- Under section 15(1) of the CGST Act, 2017 the value of a supply is the transaction value — the price actually paid or payable — where supplier and recipient are not related and the price is the sole consideration.
- The value includes other taxes and levies (but not GST and compensation cess), the supplier's liabilities paid by the recipient, incidental expenses, interest or late fee for delayed payment, and price-linked subsidies other than government subsidies (section 15(2)).
- A discount after supply is excluded from value only if it was agreed at or before the supply, is linked to the invoices, and the recipient reverses the related credit (section 15(3)(b) as in force); the Finance Act, 2026 relaxes this, but that amendment has not yet been brought into force.
- Where transaction value cannot be used — related persons, non-monetary consideration and others — the value is determined under Rules 27 to 35 of the CGST Rules.
The provisions
15(1)Transaction value
Statutory text
(1) The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply.
*Enforced w.e.f. 1st July, 2017.
15(2)What is included
Statutory text
(2) The value of supply shall include-
(a) any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than this Act, the State Goods and Services Tax Act, the Union Territory Goods and Services Tax Act and the Goods and Services Tax (Compensation to States) Act, if charged separately by the supplier;
(b) any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods or services or both;
(c) incidental expenses, including commission and packing, charged by the supplier to the recipient of a supply and any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the time of, or before delivery of goods or supply of services;
(d) interest or late fee or penalty for delayed payment of any consideration for any supply; and
(e) subsidies directly linked to the price excluding subsidies provided by the Central Government and State Governments.
Explanation.-For the purposes of this sub-section, the amount of subsidy shall be included in the value of supply of the supplier who receives the subsidy.
What it means
- (a) taxes, duties, cesses, fees and charges under other laws — but not CGST, SGST, UTGST, IGST or compensation cess;
- (b) amounts the supplier is liable to pay but which the recipient has incurred;
- (c) incidental expenses — commission, packing and anything done by the supplier at or before delivery;
- (d) interest, late fee or penalty for delayed payment;
- (e) subsidies directly linked to price, other than subsidies from the Central and State Governments — included in the value of the supplier who receives them.
15(3)Discounts
Statutory text
(3) The value of the supply shall not include any discount which is given-
(a) before or at the time of the supply if such discount has been duly recorded in the invoice issued in respect of such supply; and
1[(b) after the supply has been effected, if for such discount, a credit note has been issued by the supplier and input tax credit as is attributable to such discount has been reversed by the recipient of the supply, in accordance with the provisions of section 34.]
(i) such discount is established in terms of an agreement entered into at or before the time of such supply and specifically linked to relevant invoices; and
(ii) input tax credit as is attributable to the discount on the basis of document issued by the supplier has been reversed by the recipient of the supply.
1. Substituted (w.e.f. yet to be notified) by section 153 of The Finance Act, 2026 No. 4 of 2026 dated 30.03.2026.
What it means
A discount at or before the supply is excluded if recorded in the invoice. A discount after the supply is, under the clause now in force, excluded only if (i) it was established by an agreement at or before the supply and is specifically linked to the relevant invoices, and (ii) the recipient has reversed the credit attributable to it, on the basis of the supplier's document.
The Finance Act, 2026 substitutes clause (b) so that a post-supply discount is excluded wherever the supplier issues a credit note and the recipient reverses the attributable credit under section 34 — without the prior-agreement and invoice-linkage conditions. That substitution takes effect only from a date to be notified, and has not been notified.
CBIC Circular 251/08/2025-GST (12.09.2025) clarified that financial or commercial credit notes, which do not reduce the supplier's tax, require no reversal of credit by the recipient, and that a manufacturer's post-sale discount to a dealer who sells on its own account is not consideration for any separate supply by the dealer.
The CBIC text above shows the substituted clause (b) from the Finance Act, 2026 — which is not yet in force — followed by sub-clauses (i) and (ii) of the clause it will replace. Until the substitution is notified, the operative clause (b) reads: "after the supply has been effected, if— (i) such discount is established in terms of an agreement entered into at or before the time of such supply and specifically linked to relevant invoices; and (ii) input tax credit as is attributable to the discount on the basis of document issued by the supplier has been reversed by the recipient of the supply."
- Circular 251/08/2025-GST, 12.09.2025 — post-sale discounts
15(4)–(5) and ExplanationValuation rules; related persons
Statutory text
(4) where the value of the supply of goods or services or both cannot be determined under sub-section (1), the same shall be determined in such manner as may be prescribed.
(5) Notwithstanding anything contained in sub-section (1) or sub-section (4), the value of such supplies as may be notified by the Government on the recommendations of the Council shall be determined in such manner as may be prescribed.
Explanation. - For the purposes of this Act,-
(a) persons shall be deemed to be "related persons" if-
(i) such persons are officers or directors of one another's businesses;
(ii) such persons are legally recognised partners in business;
(iii) such persons are employer and employee;
(iv) any person directly or indirectly owns, controls or holds twenty-five per cent. or more of the outstanding voting stock or shares of both of them;
(v) one of them directly or indirectly controls the other;
(vi) both of them are directly or indirectly controlled by a third person;
(vii) together they directly or indirectly control a third person; or
(viii) they are members of the same family;
(b) the term "person" also includes legal persons;
(c) persons who are associated in the business of one another in that one is the sole agent or sole distributor or sole concessionaire, howsoever described, of the other, shall be deemed to be related.
What it means
Where the value cannot be found under sub-section (1), it is determined under Rules 27 to 35 of the CGST Rules: consideration not wholly in money (Rule 27), supplies between distinct or related persons (Rule 28 — open market value, with a 90% option where the recipient resells; and, from 26.10.2023, 1% of the amount guaranteed for corporate guarantees between related persons), supplies through agents (Rule 29), cost plus 10% (Rule 30) and a residual method (Rule 31). Sub-section (5) lets the value of notified supplies be prescribed — for example Rule 31A for lottery, betting, casinos and online money gaming.
The Explanation defines related persons: officers or directors of each other's businesses, partners, employer and employee, a 25% shareholding common to both, control of one by the other or both by a third person, joint control of a third person, members of the same family, and sole agents, distributors or concessionaires.
Statutory text as published on the CBIC tax information portal, as on 03.10.2026; the numbered notes record each amendment. Official source
Common questions
- Is a post-sale discount excluded from GST value?
- Under section 15(3)(b) as in force, only if it was agreed at or before the supply, linked to specific invoices, and the recipient reverses the related credit. The Finance Act, 2026 relaxes the conditions, but that change has not yet been brought into force.
- Are other taxes included in the GST value?
- Yes — taxes, duties, cesses, fees and charges under other laws are included; CGST, SGST, UTGST, IGST and compensation cess are not (section 15(2)(a)).
- How are supplies between related persons valued?
- At open market value under Rule 28 of the CGST Rules (or 90% of the price to unrelated customers where the recipient resells), since transaction value under section 15(1) applies only between unrelated parties.
Commentary and case notes checked against the judgments and CBIC sources on 04.10.2026.
What it means
Three conditions: a price actually paid or payable for the supply; supplier and recipient not related; and price the sole consideration. If any fails, sub-section (4) and the valuation rules apply instead.