QUESTION

The assessee is billing to customer. Actual bill is for Rs.50000 including GST but from customer, assessee is going to take Rs.30000 and Rs.20000 will come to his account in the form of subsidy from state govt. So, whether assessee need to pay GST on Rs.30000 or Rs.50000? The assessee is in the business of government subsidised solar rooftop.

ANSWER

Facts of the case:  Actual bill is for Rs.50000 including GST but from customer, assessee is going to take Rs.30000 and Rs.20000 will come to his account in the form of subsidy from the State Government. Whether assessee need to pay GST on Rs.30000 or Rs.50000?

Law Applicable: CGST RULE 46

Subject to rule 54, a tax invoice referred to in section 31 shall be issued by the registered person containing the following particulars, namely,-

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(j) total value of supply of goods or services or both;

(k) taxable value of the supply of goods or services or both taking into account discount or abatement, if any;

SECTION 15 OF CGST ACT

'(2) The value of supply shall include''

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e)  subsidies directly linked to the price excluding subsidies provided by the Central Government and State Governments.

Explanation.'' For the purposes of this sub-section, the amount of subsidy shall be included in the value of supply of the supplier who receives the subsidy. 

Interpretation: In GST valuation is done as per section 15. Clause (e) of Section 15 subsection (2) relating to value of supply excludes the amount of subsidy provided by the Central Government and State Government. Therefore GST is not applicable on the amount of subsidy received from State Government.

For invoice purpose, if the subsidy is  only on production of invoice of Rs 50000 Then invoice value 50000 less subsidy 20000 =Taxable value as per section 15 i.e. Rs 30000

Show all the above details on invoice.
 

However if the authority giving subsidy gives subsidy irrespective of the sale price then simply mention taxable value Rs 30000 on invoice.

Conclusion: GST will not be applicable on amount of subsidy received from State Government. (Reply dt. 16/03/2021)