Valuation of Supply – Principal to Agent and Vice Versa

In the context of Goods and Services Tax (GST) in India, valuation of supply is an important aspect of tax compliance. The valuation of supply determines the value of the goods or services being supplied, which forms the basis for calculating the tax liability.

In the case of supplies made by a principal to an agent or vice versa, the valuation of supply can become complex. In such cases, it is important to understand the concept of "deemed supply" and how it affects the valuation of supply.

When a principal supplies goods or services to an agent, and the agent further supplies these goods or services to a third party, the supply made by the agent is considered a "deemed supply." In such a case, the value of the deemed supply is determined by taking into account the commission or other charges that the agent is entitled to receive.

Similarly, when an agent supplies goods or services to a principal, and the principal further supplies these goods or services to a third party, the supply made by the principal is considered a "deemed supply." In such a case, the value of the deemed supply is determined by taking into account the cost price of the goods or services and any additional expenses incurred by the principal.

In both cases, it is important to ensure that the value of the deemed supply is determined accurately, as this forms the basis for calculating the tax liability. To avoid any errors or discrepancies, it is advisable to maintain detailed records of all transactions and to seek professional assistance if required.

In conclusion, the valuation of supply in the context of principal to agent and vice versa can become complex, and it is important to understand the concept of "deemed supply" and how it affects the valuation of supply. By maintaining accurate records and seeking professional assistance if required, taxpayers can ensure that they are in compliance with the relevant rules and regulations and avoid any penalties or fines.