Rule 29 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.
Goods moved to a consignment agent have not been sold. No customer has been found, no price agreed, no money received. Yet Schedule I paragraph 3 makes the movement a supply.
Which raises an awkward question: what is the value of goods whose price has not yet been discovered?
Rule 29 answers it with an option that exists nowhere else in the valuation rules.
Schedule I paragraph 3 deems a supply of goods by a principal to his agent where the agent undertakes to supply them on behalf of the principal, and by an agent to his principal where the agent undertakes to receive them on behalf of the principal, to be a supply even without consideration. Rule 29 values it at (a) the open market value, or at the option of the supplier, 90% of the price charged for the supply of goods of like kind and quality by the recipient to his unrelated customer — and where that fails, Rule 30 or Rule 31.
When Schedule I paragraph 3 applies
The paragraph is narrower than it first appears. It covers a supply of goods — not services — where:
- the principal supplies to the agent and the agent undertakes to supply those goods on behalf of the principal; or
- the agent supplies to the principal and the agent undertakes to receive those goods on behalf of the principal.
The phrase "on behalf of the principal" is doing the work. Circular No. 57/31/2018-GST clarified the test: what matters is whether the agent has the authority to pass or receive the title in the goods on behalf of the principal, and whether the invoice for the further supply is issued by the agent in his own name.
Where the agent invoices in his own name, the arrangement is within Schedule I paragraph 3. Where the agent merely facilitates and the principal invoices the customer directly, it is not — the agent is supplying a service, and the goods never became the agent's.
That distinction separates a del credere or consignment agent from a broker.
The 90% option
Rule 29(a) gives open market value as the primary basis, and then:
"...or at the option of the supplier, be ninety per cent of the price charged for the supply of goods of like kind and quality by the recipient to his customer not being a related person, where the goods are intended for further supply by the said recipient."
The illustration in the rule is the standard one: a principal supplies groundnuts to his agent, and the agent is supplying groundnuts of like kind and quality in subsequent supplies at ₹5,000 per quintal on the day of supply. Another independent supplier is supplying groundnuts of like kind and quality at ₹4,550 per quintal. The value of the supply made by the principal shall be ₹4,550 per quintal, or at the principal's option, 90% of ₹5,000 = ₹4,500 per quintal.
Two things to notice.
It is the supplier's option. The principal chooses; the agent does not, and the officer cannot force one basis.
The 10% haircut is a proxy for the agent's margin. It recognises that the agent's onward price includes the agent's own value addition, which the principal did not supply.
Rule 29(b) and the fallback
Rule 29(b): where the value cannot be determined under clause (a), it shall be determined by Rule 30 or Rule 31, in that order — 110% of cost, then residual reasonable means. Rule 30 cost-plus valuation →
How this differs from Rule 28
Both deal with supplies without a market-tested price, and the 90% mechanics look similar. The differences matter.
| Rule 28 (related or distinct persons) | Rule 29 (through an agent) | |
|---|---|---|
| Trigger | Schedule I para 2 | Schedule I para 3 |
| Primary basis | Open market value | Open market value |
| 90% option | First proviso, where goods are for further supply as such | In the rule itself, where goods are intended for further supply |
| Full-credit deeming | Yes — second proviso deems invoice value to be open market value | No such proviso |
| Applies to services | Yes | No — goods only |
The absence of a full-credit deeming in Rule 29 is significant. A principal supplying to a registered agent who can take full credit does not get the invoice-value shortcut that Rule 28 provides. The 90% option is the practical substitute.
Practical notes
- Establish the agency characterisation first. Circular 57/31/2018 turns on who invoices the ultimate customer.
- Where the 90% option is used, capture the agent's actual onward price for like kind and quality goods on the relevant date. That figure is the evidence.
- Invoice the agent. A Schedule I supply still requires a tax invoice under s.31, even without consideration.
- Track the movement. Goods to an agent move on an invoice, not a delivery challan, because it is a supply.
- Where the agent is unregistered, the supply is still taxable but no credit flows onward — a real cost, not a wash.
Key takeaways
- Schedule I paragraph 3 makes principal-to-agent supplies of goods taxable without consideration.
- The test is whether the agent invoices the ultimate customer in his own name — Circular 57/31/2018-GST.
- Rule 29(a): open market value, or at the supplier's option, 90% of the agent's onward price to an unrelated customer.
- Rule 29(b): failing that, Rule 30 then Rule 31.
- Rule 29 has no full-credit deeming equivalent to Rule 28's second proviso.
- It applies to goods only.
Read next
- Supplies to Related Persons: Schedule I and Rule 28
- Rule 30: Cost Plus Ten Per Cent
- Schedule I: Supply Without Consideration
- Valuation Rules 27 to 35 Explained
Disclaimer: Positions stated as on 5 September 2026, based on the CGST Rules as amended to 31 March 2026 (ICAI Bare Law, 12th edition) and Circular No. 57/31/2018-GST.