Basics GST Laws and Rules Part -3
                     Basics: GST Laws and Rules Part -3
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The Goods and Services Tax (GST) has brought significant changes in the 
Indian economy. It has been consistently reshaping the tax calculation
 system. However, it has also confused taxpayers and people in business 
concerning the GST laws and rules. The new GST tax system has 
eliminated the cascading taxes on the supply of goods and services. It 
has successfully replaced indirect taxes such as value-added tax, excise 
tax, service tax, and other local taxes.
In theory, the implementation of GST and relaxations notified recently 
might sound great, but how do business owners get ahead with it? This 
article is part of our basic GST guide; Part-3 briefly summarizes various 
GST rules and regulations.
GST Rule-1: Title, Commencement & Application
The above mentioned GST laws put together can be termed as Goods and 
Services Tax (GST) Valuation Rules, 2016. This rule helps determine the value 
of the supply of goods and services. The law applies to the supply of services 
and goods under CGST, IGST, and SGST.
GST Rule-2: Definitions
These rules define specific terms as per the context. For instance, the “Act” is 
defined either as the IGST Act or CGST Act and, in some context, SGST Act. 
The term “goods of like kind and quality” is used to define physically similar, 
identical, qualitative, and reputed goods. It describes the value of goods that 
perform the same functions. Wherein the term “services of like kind and 
quality” defines the identical or similar services supplied. Any word, 
expression, or phrase that is not explicitly defined under this rule shall have 
the same meaning as specified by the law.
GST Rule-3: Determination of Value
The value of any goods or services is considered as transaction value, subject 
to rule 7 under the GST law. In monetary terms, “transaction value” is the 
specified value of the supplies. When a transaction consists of both taxable 
and non-taxable supply, it is identical to the monetary consideration attributed 
to it. The acceptance of the value remains unchanged even when the supplier 
and recipient are related.
The value of supplies depends on where goods are being transported from; 
one business place to another, principal to an agent or visa-versa, one country 
to another, and the same location. Only supply values specified under 
subsection (4) of GST law, as per Article 17, are determined according to Rules 
4 to 6.
GST Rule-4: Determination of Value of Supply Through Comparison
The value of supplies that cannot be determined under Rule 3 is determined 
under this rule. For instance, the value of goods and services supplied is 
determined by the transaction value based on the same quality and kind 
under the sub-rule provisions (2). Wherein. If the value is being determined 
under sub-rule (1), various factors have to be considered; the difference in the 
date of supply and the difference in the quantity and commercial levels. The 
officer must also consider the difference in composition, design, quality, 
freight, and insurance charges of the goods and services concerning the place 
of supply.
GST Rule-5: Value Method
When the value of supply cannot be determined by the rules mentioned 
above, it is determined under Rule 5 based on the computed value. The value 
methods include production cost, manufacturing, processing, cost of provision, 
brand or design charges, profits, and general of the goods and services of the 
same kind and quality as that of other suppliers.
GST Rule-6: Residual Method
The residual method helps determine the value of goods and services that 
other rules fail to determine. Rule 6 determines the value using factors 
consistent with the general and principal provisions of these rules.
GST Rule-7: Rejection of Declared Value
If the concerned authority feels the need to cross-check the value’s furnished 
details or accuracy, they will ask the supplier to provide additional information 
as evidence. After receiving further proof, if the designated authorities feel the 
need to examine the declared value’s accuracy, the value of any such goods 
or services will be considered deemed. The transaction value of any such 
goods or services cannot be determined as per the sub-rule (1) under Rule 3.
The reasons for doubt cannot be limited to the significantly higher or lower 
value of goods or services than the market value of similar products. 
Authorities cannot reject the determined value based on the description, 
quality, manufacturing or production date, and quantity. Concerned officers 
must notify the suppliers by writing the reasons for doubting the accuracy of 
furnished details of determining value. Further, suppliers will be provided with 
an opportunity to clarify the doubts before taking the final decision under the 
rub-rule (1).
GST Rule-8: Valuation in Certain Cases
Pure Agent – The value of goods and services that remain undetermined 
under any of the rules mentioned above will be contained under Rule 8. The 
law excludes a service provider’s expenditure as a pure agent from the value 
of taxable service.
Money Changer – The value of any taxable service supplied, which includes 
the purchase of foreign currency or currency exchange, is determined by the 
service provider.
Conclusion
Staying GST compliant while running a business can seem tedious. 
However, it is one of the significant business operations that help business 
owners adhere to GST rules in 2020. The daunting accounting tasks 
become much more manageable with reliable and 
GST billing and invoicing system. It helps create and send invoices and 
track inventory as per the notified GST invoice rules. It is easy to use, 
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Imprezz is the pioneer of accounting software in India. It helps bill faster, 
easier, and keeps track of each transaction while your business can 
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