Ready Made Garment Trading Company  offer 25% discounts for procurements made by employees. Cost of Ready Made Garment is Rs 100 . GST is to be levied on Rs 75 or on Rs 100 ?

Value of supply of goods or services or both between distinct or related persons, other than through an agent

Rule 28 CGST Rules 2017. The value of the supply of goods or services or both between distinct persons as specified in sub-sections (4) and (5) of section 25 or where the supplier and recipient are related, other than where the supply is made through an agent, shall-

(a) be the open market value of such supply;

…..

Explanation to Section 15 of CGST Act

(a) persons shall be deemed to be “related persons” if—

……
(iii) such persons are employer and employee;

……….

Since the transaction is between related parties being employee and employer, the valuation would be “open market” value and tax will have to be computed based on the value at which the same product is made available to third party / non employees. Accordingly, amount collected from the employee in this case would be Rs 75 (after Rs 25 discount for every Rs 100) but tax will be calculated on Rs 100.

Related Topic on GST