Retail sale price based valuation under Section 15(5)
A power to notify a different basis of valuation for specified supplies. Where it is used, the ordinary rules stop applying.
Section 15(5) empowers the Government, on the recommendations of the Council, to notify supplies in respect of which the value shall be determined in the manner prescribed, notwithstanding the general provisions in Section 15(1) and (4). Where such a notification applies, the notified basis governs and the transaction value is displaced. The provision is the source of special valuation mechanisms and must be checked for the sector before applying the general rules.
How to use the provision
Before applying Section 15(1), check whether a notification under Section 15(5) covers the supply. Where it does, the notified basis is the value and the transaction value analysis is irrelevant.
Where a notified basis applies, the ordinary questions of discounts, inclusions and related party valuation do not arise in the same way, and the notification's own conditions govern.
Rules 32 to 35 provide the prescribed mechanisms for specified supplies including foreign currency exchange, air travel agent services, life insurance business, second hand goods and lottery, betting and gambling.
The practical discipline is to identify the applicable mechanism for the sector once, in writing, rather than defaulting to the general rules.
The sectors where a special mechanism applies
Money changing and foreign currency exchange, under Rule 32(2), with an option between two methods that must be exercised for the financial year.
Air travel agents, under Rule 32(3), with the value fixed as a percentage of the basic fare, differing for domestic and international bookings.
Life insurance business, under Rule 32(4), with the value determined by reference to the premium and the investment component.
Second hand goods, under Rule 32(5), with the margin scheme where no credit was availed on the purchase.
Lottery, betting, gambling and actionable claims, which have their own notified mechanisms and their own litigation.
What to do on Monday
Identify the applicable valuation mechanism for your sector in writing, once, and review it annually.
Where an annual option exists, exercise and record it before the year begins.
Keep the margin scheme working papers where second hand goods are dealt in.
Do not apply the general rules where a notified mechanism covers the supply.
This page states the general position. A reader with a specific question on their own facts may write to the GST practice at AMLEGALS.
Write to the GST practiceQuestions we are asked on this
Does the margin scheme apply to all used goods?
Rule 32(5) applies to a taxable person dealing in buying and selling second hand goods where no input tax credit was availed on the purchase.
Can we choose between the two money changing methods?
The option under Rule 32(2) must be exercised for the financial year and cannot be changed during it.
Does a special mechanism override related party valuation?
Where the notified basis applies to the supply, it governs. Read the notification's conditions.
Is the air travel agent value optional?
Rule 32(3) provides the mechanism for that service. Verify the current text and its application to your model.
Where do we find the notified supplies?
In the rules and the notifications issued under Section 15(5). Check them for your sector before applying the general rules.
In this cluster
- Valuation under Section 15: transaction value and its exceptions
- Rule 28 in practice: related party and distinct person supplies
- Corporate guarantees between group companies: the one percent rule
- Northern Operating Systems: secondment, and the notice that follows every expatriate
- Cross charge of common costs between branches
- Mandatory Input Service Distributor: the compliance rebuild
- Post sale discounts: the agreement requirement and the credit note trail
- Free of cost supplies, warranty replacements and moulds
- Reimbursements and the pure agent exclusion under Rule 33
- Liquidated damages, penalties and notice pay recovery
GST Insights is published by AMLEGALS for general information. Law stated as on 3 September 2026. Not advice on any particular set of facts; not an advertisement or a solicitation under Rule 36 of the Bar Council of India Rules. Readers with a question on their own facts may write to the GST practice of their own accord.