A statutory recovery is not automatically outside GST
Section 15(2)(a) includes specified separately charged taxes, duties, cesses, fees and charges levied under another law in the value of supply. A recovery without profit is not automatically excluded. The provision excludes the taxes under the CGST, SGST, UTGST and compensation-cess enactments it identifies; IGST is not added to its own taxable base. Review this with the transaction-value framework and any applicable special valuation rule. This article is checked as of 24 October 2026 against the CGST Act and Rules in ICAI’s April 2026 bare-law compilation.
Classify the line before calculating tax
| Invoice item | Question | Value treatment |
|---|---|---|
| Other statutory levy | Is it imposed under a law and separately charged by this supplier? | Review section 15(2)(a) inclusion. |
| GST-family tax | Is the line the applicable GST or compensation cess? | Do not recursively add it as an ordinary other levy. |
| Embedded cost | Is it already in the price paid or payable? | Do not add the same amount twice. |
| Third-party disbursement | Does a precise separate exclusion actually apply? | A statutory-fee label alone proves no exclusion. |
Retain the charging enactment or official demand, the person legally liable, and the supply relationship. An amount called a municipal fee in an ERP ledger may be a private service charge. Conversely, an authentic statutory fee may still be part of the supplier’s taxable recovery. This article does not assert that any particular local charge exists or is legally recoverable from every customer.
Keep the statutory levy and GST computations separate
The amount due under the other law must first be independently established. Then reconcile how it enters the consideration for this supply. A line already included in the agreed price is not added again simply because its breakup is shown below the price. Where it is a genuinely additional separately charged included levy, add it once before applying the independently verified GST rate. Markup is not the statutory test.
For intra-State supplies, compute CGST and SGST on the same proper base. Do not add CGST to that base when computing SGST, or compound both components. For an amount contractually inclusive of GST, use the applicable tax-inclusive extraction rather than multiplying the gross by the rate. If compensation cess or another special levy is relevant, compute it under its own rules; the simple examples below assume none.
An excluded tax is different from an excluded reimbursement
Rule 33 pure-agent exclusion has its own cumulative conditions. It cannot be invoked merely because a fee is fixed by government or recovered at cost. Equally, this article does not override a properly established exclusion or special valuation rule. Sections 15(2)(b) and (c) may apply to different expense patterns; identify the correct provision without adding the same economic amount more than once.
Reconcile the invoice, not just the ledger caption
Maintain a bridge from base price to statutory additions, other value additions, taxable value and tax. Compare it to the customer’s agreed gross payable. An invoice discrepancy may be an omitted value item, a duplicate recovery or a tax-head error. Correct each through the applicable invoice and return process; the calculation below is not permission to issue an unsupported credit note. All illustration levy amounts are fictional assumed lawful charges; 18% combined GST is an independently assumed applicable rate, not a universal rate for every supply.
Worked illustrations
These illustrations use fictional facts and expressly stated assumptions. Amounts are Indian rupees unless a different currency or unit is specified. They are independent examples, not findings about any actual client.
Illustrative example 1: Additional lawful levy
Base price is ₹1,00,000 and a separately charged statutory levy within section 15(2)(a) is ₹5,000. Value is ₹1,05,000. At assumed 18% GST, tax is ₹18,900 and total payable ₹1,23,900. The absence of markup on ₹5,000 does not exclude it.
Illustrative example 2: Embedded charge
The agreed tax-exclusive price is ₹1,05,000, already including a ₹5,000 statutory cost. Its breakup is displayed for information. Value remains ₹1,05,000 and GST ₹18,900. Adding ₹5,000 again would duplicate the same cost.
Illustrative example 3: Parallel tax heads
Assume proper intra-State value ₹1,00,000 and applicable CGST 9% plus SGST 9%. Each component is ₹9,000, total ₹18,000. SGST is not ₹9,810 computed on price plus CGST.
Illustrative example 4: Two different levies
Price ₹2,00,000 plus two separately charged included statutory levies of ₹4,000 and ₹6,000 gives value ₹2,10,000. Assumed 18% GST is ₹37,800. Keep both source demands, rather than using one unexplained ₹10,000 journal.
Illustrative example 5: Tax-inclusive quotation
Assume ₹1,18,000 is the entire payable amount inclusive of 18% GST and already includes a ₹5,000 statutory cost. Taxable value is ₹1,00,000 and GST ₹18,000. The statutory cost does not justify adding another ₹5,000 beyond this stipulated inclusive quotation.
Illustrative example 6: Quantify an omission
A supplier correctly taxes the ₹1,00,000 price but omits an additional ₹5,000 included levy from value. At assumed 18%, the tax shortfall is ₹900. This quantifies the valuation omission only; interest, correction documents and procedural consequences require separate facts.
Ten-step verification table
| Step | Verification | Evidence to retain |
|---|---|---|
| 1 | Identify the supply and charge mechanism | Classification and tax-liability file |
| 2 | Check whether a special valuation rule applies | Valuation route memorandum |
| 3 | Identify the other levy’s charging law | Official law, demand or receipt |
| 4 | Identify the liable person and supplier recovery | Contract and invoice terms |
| 5 | Distinguish excluded GST-family tax lines | Tax-head mapping |
| 6 | Check what is already embedded in price | Agreed quotation and breakup |
| 7 | Test any claimed specific exclusion | Evidence for the actual exclusion conditions |
| 8 | Recalculate value and each tax component | Independent invoice working |
| 9 | Reconcile gross payable and returns | Invoice-to-ledger-to-return bridge |
| 10 | Resolve exceptions through proper documents | Correction approval and retained evidence |
Sixteen practitioner FAQs
1. Is an at-cost levy recovery automatically excluded?
No. Lack of markup is not the section 15(2)(a) exclusion test.
2. Does a government-fixed amount always escape GST?
No. Establish how the statutory charge forms part of the supply value.
3. What evidence proves a statutory levy?
The relevant law and official demand or receipt, linked to the actual charge.
4. Can a private fee use the same label?
A label cannot establish a charge under law; classify the real transaction.
5. Should an embedded cost be added again?
No. Reconcile the price and avoid counting the same amount twice.
6. Is CGST added before calculating SGST?
No. Both components apply to the same proper taxable value.
7. Is IGST added recursively to its own base?
No. Separate the taxable value from the output tax charged on it.
8. Is compensation cess an ordinary other-law addition here?
The provision expressly identifies the compensation-cess enactment among its exclusions. Apply any cess calculation separately.
9. Does a separate invoice line prove an exclusion?
No. Separate presentation does not settle the legal value treatment.
10. Can Rule 33 be used for any statutory fee?
Only where its own conditions are established; government origin alone is insufficient.
11. What if the supplier pays a customer’s obligation?
Examine the actual liability and any applicable reimbursement framework; do not mechanically apply this example.
12. Is 18% the rate for all included levies?
No. These examples assume that rate for the underlying fictional supply.
13. What if the contract fixes a GST-inclusive total?
Extract the applicable tax and reconcile the embedded charge; do not tax the gross again.
14. Can the illustrative amounts establish a local levy’s legality?
No. They assume lawful charges solely to explain the GST calculation.
15. Does the omission example calculate interest?
No. It isolates the ₹900 valuation-related tax shortfall; timing and payment facts are needed for interest.
16. What working should be retained?
A price-to-value-to-tax bridge with the charging law and invoice history.
Conclusion
Identify the levy’s legal basis and its place in the agreed price. Include the proper amount once, then calculate GST on the reconciled value rather than on ledger labels.