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    Definition of Supply Under GST

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    Rohit Bajpai
    Under GST, supply is the taxable event and includes all transactions of sale, transfer, barter, lease, or disposal of goods and services. There must be consideration involved and the supply must be made in the course of business. Different types of supplies include composite supply where goods and services are supplied together and mixed supply where they can be supplied separately. Certain activities like employee services and sale of land are excluded from the definition of supply. The scope of supply has been expanded over time through amendments.

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    Definition of Supply Under GST

    Uploaded by

    Rohit Bajpai
    260 views8 pages
    Under GST, supply is the taxable event and includes all transactions of sale, transfer, barter, lease, or disposal of goods and services. There must be consideration involved and the supply must be made in the course of business. Different types of supplies include composite supply where goods and services are supplied together and mixed supply where they can be supplied separately. Certain activities like employee services and sale of land are excluded from the definition of supply. The scope of supply has been expanded over time through amendments.

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    Definition of Supply under GST

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    Under GST, supply is the taxable event and includes all transactions of sale, transfer, barter, lease, or disposal of goods and services. There must be consideration involved and the supply must be made in the course of business. Different types of supplies include composite supply where goods and services are supplied together and mixed supply where they can be supplied separately. Certain activities like employee services and sale of land are excluded from the definition of supply. The scope of supply has been expanded over time through amendments.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    260 views8 pages

    Definition of Supply Under GST

    Uploaded by

    Rohit Bajpai
    Under GST, supply is the taxable event and includes all transactions of sale, transfer, barter, lease, or disposal of goods and services. There must be consideration involved and the supply must be made in the course of business. Different types of supplies include composite supply where goods and services are supplied together and mixed supply where they can be supplied separately. Certain activities like employee services and sale of land are excluded from the definition of supply. The scope of supply has been expanded over time through amendments.

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    Definition of Supply under

    GST: Scope explained


    Under GST, Supply is considered a taxable event for charging tax. The
    liability to pay tax arises at the ‘time of supply of goods or services’. Thus,
    determining whether or not a transaction falls under the meaning of supply,
    is important to decide GST’s applicability.

    Concept Before GST

    Under the erstwhile indirect tax regime, there was no concept of Supply.
    The stage at which indirect taxes were levied varied under different tax
    laws. The ‘excise duty’ was charged on goods manufactured when they
    were taken out of the factory. ‘Service Tax’ was levied based on certain
    rules known as the ‘point of taxation’ rules, for services rendered. A VAT
    would arise on the value of the sale of goods or provision of services. The
    present system has merged all taxes to maintain a single taxable event.

    Latest Updates:

    21st December 2021


    Paragraph 7 under Schedule II has been removed and included within
    Section 7 as a new clause (aa). Accordingly, the supply of goods by any
    unincorporated association or body of persons to its members will be
    designated as supply.

    1st February 2021


    Union Budget 2021:
    Section 7 of the CGST Act was amended to include a new clause under the
    definition of supply. Activities or transactions involving the supply of goods
    or services by any person, other than an individual, to its members or
    constituents or vice-versa, for cash, deferred payment or other valuable
    consideration. Earlier, this supply would have been considered as only
    supply of goods under schedule II. So, the scope is expanded now for levy.

    What is supply under GST?


    Supply includes sale, transfer, exchange, barter, license, rental, lease and
    disposal. If a person undertakes either of these transactions during the
    course or furtherance of business for consideration, it will be covered under
    the meaning of Supply under GST.
    Elements of Supply
    Supply has two important elements:

     Supply is done for a consideration

     Supply is done in course of furtherance of business

    If the aforementioned elements are not met with, it is not considered as a


    sale.

    Examples:

     Mr. A buys a table for Rs.10,000 for his personal use and sells it off
    after 10 months of use to a dealer. This is not considered as supply
    under CGST as this is not done by Mr A for the furtherance of
    business

     Mrs. B provides free coaching to neighbouring students as a hobby.


    This is not considered as supply as this act is not performed for a
    consideration.

    However, as specified in Schedule I of GST Act, certain activities are


    considered as supply even if it is made without consideration. 
    Classification of supply and types

    Composite supply and Mixed Supply:

    There are a few supplies which are made together with two or more items.
    Such supplies are further classified into Composite Supply and Mixed
    Supply.   

    A supply comprising of two or more goods/services, which are necessarily


    supplied in conjunction with each other as per frequent business practices
    followed in that area. In other words, these items cannot be supplied
    individually. There is a principal supply and a secondary supply in the
    whole transaction. In such cases, the tax rate on principal supply will apply
    to the entire supply. E.g. Buying a Dry Fruit Gift Box for Diwali. It includes
    dry fruits, a box, and a wrapper. Box and wrapper cannot be sold
    individually without the main content which is dry fruit. This is a composite
    supply. 

    A supply comprising of two or more goods/services, wherein the supplies


    are independent of each other and are not necessarily required to be sold
    together is called a mixed supply. The first condition to be met for mixed
    supply is that ‘it should not be a composite supply’. In such cases, the tax
    rate that is higher of the two supplies will be applicable to the entire
    supply. E.g Buying a Christmas package consisting of cakes, aerated
    drinks, chocolates, Santa caps, and other gift items. Each of these items
    can be sold separately and are not dependent on each other. This is a
    mixed supply.  
    Import of services:

    Import of goods/services with consideration is considered as supply


    whether for personal or business use.

    Scope: List of supplies and taxability

    Transfer – Transfer of title of goods

    Activities considered as a supply of goods as per Schedule II of the GST Act

    Transfer of business assets:


    1. Business assets transferred/disposed of with or without consideration

    2. If the owner ceases to be a taxable person then his business assets will be assumed to be sup
    course of his business –

    This is not applicable in the following cases:


    a. Business is transferred to another person
    b. Business is carried by a taxable representative

    Supply of goods by an unincorporated AOP/BOP for a consideration

    Transfer – Transfer of right in goods without transfer of title


    Activities considered as a supply of services as per Schedule II of GST Act

    Land and building


    1. Lease, rent, tenancy, easement, licence to occupy land
    2. Lease or letting out of the building (Building includes commercial/ industrial/residential com
    use either wholly or partly)

    Transfer of business assets: The owner uses or allows to use business assets for personal use.

    Construction of a building/complex intended for sale to a buyer wholly or partly

    Temporary transfer or permitting the use of intellectual property right

    Renting of immovable property (Rented residence is exempted from GST)

    Development of information technology software

    Agreeing to refrain from an act – Non-competition agreements

    Transfer of right to use any goods for a consideration

    Any treatment or process which is applied to another person’s goods is a supply of services.

    Activities or transactions treated neither as the sale of goods nor sale


    of services as per Schedule III of GST Act

    Following are the transactions covered under negative list:


     Services provided by an employee to the employer

     Gifts up to Rs.50,000/- in value in a Financial Year, by an employer to


    an employee

     Services of the funeral, burial, crematorium or mortuary including


    transportation of the deceased

     Services by any court or Tribunal

     Duties performed by the MP/MLA/MLC/ Members of Local Bodies

     Duties performed by any person as a Chairperson or a Member or a


    Director in a body established by the Central Government or a State
    Government or local authority

     Duties performed by any person who holds any post in pursuance of


    the provisions of the Constitution in that capacity

     Sale of Land

     Sale of Building (However, If construction of a complex /building


    intended for sale to a buyer and part of the consideration is received
    before completion, then it will be treated as Supply of Services)

     Actionable claims, other than lottery, betting and gambling

    Thus, GST law has simplified tax treatment by clearly classifying activities
    considered as goods/services or transactions considered as neither sale of
    goods or services.

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