Blog Post

Under the current indirect tax structure, the taxable event differs for each type of tax. The taxable events under the current indirect tax structure are captured below:

Type of Tax Taxable Event
Central Excise Removal of excisable goods
VAT On sale of goods
Service Tax Provision of taxable services

The taxable event under GST is the Supply of Goods and/Services. All taxes such as Central Excise, Service Tax, and VAT/CST will be subsumed under GST, and the concept of manufacture of goods, sale of goods, and provision of services would no longer be relevant.

Thus, for every business, it is crucial to understand the relevance of supply which sets the scope of transactions liable for the levy of GST.

Scope of Supply under GST

The term ‘supply’ includes all forms of supply of goods or services, supplied or to be supplied, for a consideration, in the course of or for the furtherance of business.

However, there are specific types of supplies mentioned in the law which needs to be considered as supply even without a consideration.

Let us understand by categorizing the different types of supply as;

  • Supplies made for consideration in the course of or for furtherance of business
  • Supplies without consideration
  • Supplies made for a consideration whether or not in the course of or for furtherance of business

Supplies made for a consideration in the course of or for furtherance of business

The following are considered as supply with consideration:

Any sale of goods or services which broadly result in the transfer of title in case of goods, and transfer of the right to use in case of services.
Any transfers between branches form a part of supply and are taxable. However, GST paid on branch transfers are fully available as Input Tax Credit.
When the consideration is paid through goods instead of money. For example, a seller has supplied goods and the buyer, supplies goods to the extent of the payment. Or when one product is exchanged with another product.
Any grant of the license to use forms part of the supply. For example online subscriptions
Renting of property fully or partially is a supply under GST
Letting out the building or property on lease is a supply under GST
Disposal of business assets forms part of supply

Stay tuned for our next blogs on exceptional scenarios which need to be treated as supply, and are liable for levy of GST.

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