Example: - 19

Govt. provides subsidy on sale of fertilizer to agriculturist. Manufacturer of fertilizer sells at lower than market price and Govt. provides the subsidy amt to manufacturer of fertilizer. Whether the amount equivalent to subsidy by govt. will be included in the transaction value?

Ans. Section 15(2)(e) of CGST Act specifically provides that subsidies directly linked to the price excluding subsidies provided by the Central Government and State Governments shall form part of Transaction value. Thus, the subsidy provided by Govt. will not form part of Transaction value even this subsidy is directly linked to the price.