In last blog we have seen three main type of GST Levies – CGST, SGST and IGST. We have also seen which levy will be applicable in which case.
Before going into the intrecacies of GST, it is important to know exact scope of GST. Scope of any tax is decided on the basis on taxable event. We have seen the meaning of the term ‘taxable event’ in last blog. We have also seen that in GST taxable event is ‘Supply of Goods and Services‘. Let us try to discuss this in detail.
By mere reading of this term, it is very simple to understand that in all cases where any goods and services are supplied, GST will be payable. What is worth noting is that GST law uses the term ‘Supply’ and not ‘Sale’. When I use the term ‘Sale’, here also goods are supplied by seller to buyer. But intention of sale is very clear, i.e. seller will give goods to buyer and will receive money from buyer for the same. However, like GST law says, when we use the term ‘Supply’, its scope become much much wider. As per GST law, Supply includes any of the following terms:
1) Normal Sale Transactions / Providing of Services
2) Gifts / Donations / Free Samples (All these activities are done without an intention for receipt of money or revenue generation. But still, there is ‘Supply’ of goods from donor to donee. Even if goods are donated or services are provided to charitable trusts, GST is payable.)
3) Exchange of goods (Here too, there is no movement of money. But still, there is ‘Supply’ of goods from one person to another. This may also include Barter exchange. Thus, all the cases where supply is done in kind, GST becomes applicable.)
4) Renting / Leasing out the Property (This includes Supply of immovable property. All the leave and license agreements, lease agreements etc. will be covered here)
5) Transaction between Principal and Agent
6) Import of services in India
7) Permanat transfer / disposal of Business Assets where input tax credit is already claimed
8) Transfer of right to use the goods without transferring title to the goods (eg. rent a cab, renting of machinery, providing free accomodation, free transportation etc)
9) Construction activity (Though there was huge resistance, this activity was covered in Vat. Same is covered in GST as well. In all first sale transactions i.e. from builder to first buyer, GST is payable. However, if entire sale consideration is paid after completion certificate is received, GST is not applicable.)
10) Any perks or services provided by Employer to Employee exceeding Rs. 50,000/- per year. This comes in the ambit of Supply of services and hence, GST will be payable.
Above points cover only broad and widely used ideas of the term ‘Supply’. There are many other clauses incorporated in the act which make meaning of ‘supply’ in GST virtually unlimited.
Along with supply, levy of GST is equally dependent on ‘Place of Supply’. Will try to cover this in next blog. Till then, Stay Tuned and Happy Reading 😊.
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