Rule 27 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Rule 27 gives a four-step ladder for valuing a supply made for a consideration that is not wholly in money, such as an exchange or a barter. You start with the open market value, and move to the next clause only if the clause above cannot be applied. The rule closes with two illustrations, a phone supplied with an exchange and a laptop supplied with a printer.
This article follows the Central Goods and Services Tax Rules, 2017 as amended up to 31 October 2025 in the compilation consulted; notifications issued after that date should be checked.
Where a supply is for a consideration not wholly in money, the value is (a) the open market value; failing that, (b) the money consideration plus the money equivalent of the non-money part, if known at the time of supply; failing that, (c) the value of a supply of like kind and quality; and failing that, (d) the money plus the equivalent of the non-money part determined under rule 30 or rule 31, in that order. Each clause applies only if the one above does not.
The section behind the rule
Rule 27 belongs to Chapter IV on determination of value of supply and works with section 15 of the CGST Act, 2017. Section 15 states that the value of a supply is the transaction value, and the Rules cover the cases where it cannot simply be taken from the price. See section 15 of the CGST Act, 2017. Rule 28 deals with related persons, rule 30 with cost, and rule 31 with the residual method: see rule 28, rule 30 and rule 31. If you are unsure whether your barter or exchange is correctly valued, our GST health check will test it.
The four clauses
The rule opens: "Where the supply of goods or services is for a consideration not wholly in money, the value of the supply shall, -".
| Step | Clause | The value of the supply is |
|---|---|---|
| 1 | (a) | The open market value of such supply |
| 2 | (b) | If the open market value is not available under clause (a), the sum total of consideration in money and any such further amount in money as is equivalent to the consideration not in money, if such amount is known at the time of supply |
| 3 | (c) | If the value is not determinable under clause (a) or clause (b), the value of supply of goods or services or both of like kind and quality |
| 4 | (d) | If the value is not determinable under clause (a), (b) or (c), the sum total of consideration in money and such further amount in money that is equivalent to consideration not in money as determined by the application of rule 30 or rule 31 in that order |
Reading the clauses together
- A ladder, not a choice. The rule does not let the supplier pick. Each clause starts with "if" the previous one does not work. The supplier must go down in order.
- "Open market value" and "like kind and quality". Both expressions are defined in the Explanation to rule 35 for the purposes of the Chapter. Open market value is the full value in money, excluding the integrated tax, central tax, State tax, Union territory tax and the cess payable by a person in a transaction, where the supplier and the recipient are not related and the price is the sole consideration. The definition of "like kind and quality" is also in that Explanation. Read rule 35 for the exact words: see rule 35: backing tax out of a tax-inclusive price.
- Clause (b) has a condition. The money equivalent counts only "if such amount is known at the time of supply".
- Clause (d) hands over to rules 30 and 31. Rule 30 is considered first, then rule 31.
The two illustrations, worked through
Rule 27 closes with two illustrations, which are printed with the rule.
Illustration (1): the phone and the exchange. "Where a new phone is supplied for twenty thousand rupees along with the exchange of an old phone and if the price of the new phone without exchange is twenty four thousand rupees, the open market value of the new phone is twenty four thousand rupees."
Applying the ladder: clause (a) works because the new phone has an open market value, its price without exchange, which is twenty four thousand rupees. The value of the supply is therefore twenty four thousand rupees, not the twenty thousand rupees paid in money. The old phone is the non-money part, and the clause (a) answer already reflects it.
Illustration (2): the laptop and the printer. "Where a laptop is supplied for forty thousand rupees along with the barter of a printer that is manufactured by the recipient and the value of the printer known at the time of supply is four thousand rupees but the open market value of the laptop is not known, the value of the supply of the laptop is forty four thousand rupees."
Applying the ladder: clause (a) fails because the open market value of the laptop is not known. Clause (b) works: the money consideration is forty thousand rupees, and the value of the printer known at the time of supply, four thousand rupees, is the further amount in money equivalent to the consideration not in money. The sum is forty four thousand rupees.
Who does what
| Who | What | By reference to | Clause |
|---|---|---|---|
| Supplier | Values the supply by its open market value | Open market value as defined in the Explanation to rule 35 | (a) |
| Supplier | If no open market value, adds the money equivalent of the non-money part, if known at the time of supply | Time of supply | (b) |
| Supplier | If neither works, takes the value of a supply of like kind and quality | Explanation to rule 35 | (c) |
| Supplier | If none works, applies rule 30, then rule 31, to the non-money part | Rules 30 and 31 | (d) |
A worked example
Both examples below use only the figures printed in the rule's illustrations, with invented names.
Example 1. Tariq Mobile Hub, an invented retailer, sells a new phone to a customer for twenty thousand rupees and takes the customer's old phone in exchange. The same new phone, sold without exchange, is priced at twenty four thousand rupees. Clause (a) applies; the value of Tariq's supply is twenty four thousand rupees.
Example 2. Delta Computers, an invented dealer, supplies a laptop for forty thousand rupees and takes a printer manufactured by the recipient, Sharma Print Works. The value of the printer known at the time of supply is four thousand rupees. Delta cannot say what the laptop would fetch in the open market. Clause (a) does not apply. Clause (b) gives forty four thousand rupees as the value of the supply of the laptop.
If the printer's value were not known at the time of supply, clause (b) would fail too, and Delta would turn to clause (c), the value of a laptop of like kind and quality, and then to clause (d) with rules 30 and 31. The rule does not supply a figure for that case.
Points to watch
- Keep the order. Skipping clause (a) because clause (b) is easier is outside the rule.
- Time of supply. The "known at the time of supply" test in clause (b) is tied to the time-of-supply provisions of the Act.
- Tax-inclusive prices. If the price is inclusive of tax, rule 35 backs the tax out; rule 27 is about the non-money part.
- Related persons. If the supplier and recipient are related, rule 28 may apply and the rule 27 ladder is for supplies not wholly in money; the two rules are different.
- Tax rates. Rule 27 prints no rate of tax. For the rate, see the rate notification for the goods or services.
Need help valuing an exchange or barter?
Where part of the consideration is goods, services or an adjustment rather than money, the value can be misstated in either direction. Our team can test your valuation against the ladder in rule 27 and the rules around it. See our GST health check.
Key takeaways
- Rule 27 values a supply made for a consideration not wholly in money, in four steps, each taken only if the one above does not work.
- Clause (a): open market value. Clause (b): money plus money equivalent of the non-money part, if known at the time of supply.
- Clause (c): value of a supply of like kind and quality. Clause (d): money plus equivalent as determined under rule 30 or rule 31, in that order.
- Illustration (1): new phone at twenty thousand rupees with exchange, twenty four thousand rupees without; value twenty four thousand rupees.
- Illustration (2): laptop for forty thousand rupees plus a printer known at four thousand rupees; value forty four thousand rupees.
Read next
- Rule 28: valuation, the ninety per cent rule and the any-value proviso
- Rule 31A of the CGST Rules, 2017: value of supply of lottery, betting, gambling and horse racing
- Rules 31B and 31C of the CGST Rules, 2017: value of supply of online gaming and of actionable claims in casinos
- Rule 30: cost plus ten per cent valuation
- Rule 31: residual valuation by reasonable means
Disclaimer: Based on the Central Goods and Services Tax Rules, 2017 and the GST Acts as amended up to 31 October 2025 in the compilation consulted, read with the Finance Act, 2026 where this article says so, as consulted on 2 October 2026. Notifications, circulars and amendments issued after that date, the forms on the common portal and the way the tax authorities apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.