GST is charged as a percentage of the value of a supply, which makes valuation a quietly important part of compliance. In most ordinary transactions the value is simply the price you charge, but several additions, exclusions and special situations can change that figure. Charging tax on the wrong value means paying too much or too little — both create problems. Here's how valuation works under GST.
Reviewed by CA Harika Chebolu, FCA · Last updated 2026-06-15
Quick answer
GST is charged on the value of supply, so getting the value right matters. Here's what goes into it, what stays out, and how related-party deals are valued.
For most supplies between unrelated parties where price is the sole consideration, the value of supply is the transaction value — the price actually paid or payable for the goods or services. This is the default, and for everyday sales it is usually all you need. The complications arise when the price is not the only consideration, when the parties are related, or when certain amounts have to be added to or excluded from the price. Start with the transaction value, then check whether any adjustment applies.
The value of supply generally includes more than the bare price. Amounts such as taxes and duties charged under other laws, incidental expenses, and charges the supplier passes on can form part of the value. Interest, late fees or penalties for delayed payment, and subsidies linked to the price (other than government subsidies) may also be included. The point is that you cannot always treat the headline price as the full taxable value — review what else the buyer is effectively paying for and whether it should be brought into the value.
Discounts can be excluded from the value of supply, but only when they meet the prescribed conditions. Discounts given at or before the time of supply and shown on the invoice are generally straightforward to exclude. Discounts offered after the supply are treated differently and have to satisfy specific conditions, often including that they were agreed beforehand and can be linked to relevant invoices. Because the treatment of post-supply discounts is conditional, document your discount terms clearly rather than assuming every discount automatically reduces the taxable value.
Charging GST on the wrong value has consequences either way. Undervaluing a supply leaves you short on tax and exposed to interest and penalties; overvaluing it means charging customers more than necessary and overpaying tax. Valuation also flows through to the credit your customer can claim, so errors do not stay contained to your own return. Keep invoices clear about what is and is not included in the price, retain evidence for discounts, and get advice on related-party or unusual transactions before fixing the value.
For most supplies between unrelated parties, it is the transaction value — the price actually paid or payable where price is the sole consideration. Certain amounts may have to be added, and qualifying discounts excluded, so check whether any adjustment applies before charging tax.
Discounts can be excluded, but only when they meet the prescribed conditions. Discounts shown on the invoice at the time of supply are generally straightforward, while post-supply discounts must satisfy specific conditions, so document your discount terms clearly.
The transaction value may not be accepted, and prescribed valuation methods apply instead because the price may not reflect an open-market figure. If you deal with related entities or on non-cash terms, do not assume your internal price is the taxable value.
Unsure what your taxable value should be? Write to the firm and we'll review your pricing, discounts and any related-party dealings and confirm the correct value of supply.