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Supply Under GST

Reviewed by Annapoorna | Updated on Sep 30, 2020



Under Goods and Services Tax (GST), supply is viewed as a taxable case for tax charges. The responsibility of paying tax occurs at the 'point of sale of goods or services.' Thus, when one evaluates the applicability of GST, it is essential to determine whether or not a transaction falls within the scope of the supply.

Supply under GST Explained

There was no definition of supply under the former indirect tax regime. The level at which indirect taxes were levied differed according to different tax legislation. Once taken out of the warehouse, the 'excise tax' was levied on products made. For services were rendered, 'Service Tax' was collected based on pre-defined rules known as 'point of taxation'. A Value Added Tax (VAT) occur on the amount of the product sold or service provision. The new scheme has merged all taxes to maintain a single taxable case.

Sale, sale, swap, barter, warrant, rental, lease and disposal requires the stock. When an individual undertakes any of these transactions for consideration during the course or furtherance of the company, they will be covered under the scope of GST Supply.

Elements of Supply under GST

Supply has two significant aspects: 1. Supply is carried out for consideration 2. Supply is made in the process of business

When the criteria mentioned above are not met, it is not treated as a transaction.

For instance,

  1. Mr A buys a table worth Rs.10,000 for his personal use and sells it off to a dealer after ten months of use. Under the Central Goods and Services Tax (CGST), this is not known to be a 'supply', as Mr A does not perform this for business.

  2. As a hobby, Mrs B offers free coaching to neighbouring students. It is not known to be 'supply', as this act is not being carried out for consideration.

However, as set out in Schedule I of the GST Act, those actions are regarded as resources, even if they are carried out without consideration. Import with payment for goods/services is known as supply, whether for personal or business use.

Certain activities/operations are expressly set out in Schedule II of the GST Act as the procurement of goods and the provision of services. Further, certain practices or transactions are not considered as selling of products or services as given in Schedule III of the GST Act.

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