GST Valuation Rules: An Interactive Guide for Related Party Transactions
For Transactions Between Related Parties in India (Updated 2025)
Who is a "Related Party" Under GST?
Under Indian GST law, specific relationships trigger special valuation rules to ensure fair tax assessment and compliance. Click on any card below to see the official explanation for each type of relationship.
The GST Valuation Rule Hierarchy: Rule 28, 30 & 31 Explained
When the standard transaction value isn't applicable, GST provides a clear sequence of valuation methods. This interactive step-by-step flowchart will guide you through the process. Click a rule to see its detailed explanation.
Start Here
Transaction with a Related Party
Rule 28
Primary Valuation Method
Rule 30
Cost-Based Value
Rule 31
Residual Method
Practical Scenarios & Key Exceptions in GST Valuation
Certain situations have specific considerations or allow for simplified valuation. Explore these common real-world cases to better understand compliance for related party transactions.
Frequently Asked Questions (FAQ)
Why is correct valuation crucial for related party transactions under GST?
Correct valuation is critical to prevent tax evasion and ensure fairness. Related parties might artificially lower the transaction value to reduce their GST liability. These rules establish an arm's length price, ensuring the government collects the appropriate amount of tax, thereby preventing revenue loss and ensuring a level playing field for all businesses.
What is "Open Market Value" (OMV) in the context of GST?
Open Market Value is the price that a supply would fetch in a transaction between two unrelated parties. It represents the fair market price under normal commercial circumstances. Rule 28 prioritizes OMV as the first method to ensure the valuation reflects a true market-based price, which is fundamental to GST compliance.
