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Published on:
February 20, 2023
By
Paramita

GST: Matters to be treated as Supply and not to be treated as Supply

Goods and Services Tax (GST) is a comprehensive indirect tax that has replaced all the indirect taxes levied on goods and services by the Government of India. GST has bought in a new era of taxation in India and has unified the country's economy, giving it a much-required boost. GST is governed by various laws, and one such law is the GST Act, which defines what is considered as supply and what is not. In this article, we will discuss the matters to be treated as supply and the matters not to be treated as supply under GST.

What is Supply under GST?

Before we dive into the matters to be treated as supply and not, let us first understand what is considered supply under GST. As per Section 7 of the GST Act, any transaction that involves the supply of goods or services or both for consideration is considered supply. The term consideration refers to the payment made or to be made for the supply of goods or services.

Matters to be treated as Supply under GST:

1. Transfer of Business Assets:

Any transfer of business assets like goodwill, tenancy rights, patent, trademark, copyright, or any other business asset that has been transferred for consideration will be considered as supply under GST.

2. Supply of Goods and Services:

Supply of goods and services by a taxable person within the territorial limits of India is considered as supply under GST. This includes supply of goods or services or both made to another taxable person, to an unregistered dealer, or to a person located outside India.

3. Barter Transactions:

Any exchange of goods or services for other goods or services, without any consideration in cash, is considered as supply under GST. This type of transaction is known as a barter transaction.

4. Import and Export of Goods and Services:

Import and export of goods and services are also considered as supply under GST. Any goods or services that are imported into India are subject to GST, while any export of goods or services from India is zero-rated under GST.

5. Supply of Goods or Services by an Agent:

Supply of goods or services by an agent on behalf of his principal, whether disclosed or not, is considered as supply under GST. This includes supply of goods or services by an agent to his own account.

6. Stock Transfer:

Any supply of goods by a taxable person to a branch or another unit located in a different state or union territory is considered as supply under GST. This type of transaction is known as a stock transfer.

7. Composite and Mixed Supply:

Composite supply and mixed supply are also considered as supply under GST. Composite supply refers to a supply made by a taxable person, which is a combination of goods or services, or both, provided in a naturally bundled form. Mixed supply refers to a supply made by a taxable person, which is a combination of two or more individual supplies of goods or services or any combination thereof, made in conjunction with each other in the ordinary course of business, and where they are supplied together for a single price.

Matters not to be treated as Supply under GST:

1. Services Provided by an Employee to the Employer:

Any service provided by an employee to the employer in the course of or in relation to his employment is not considered as supply under GST. This includes services like salary or wages paid to an employee, the service of a director to a company, etc.

2. Sale of Personal Goods:

Sale of personal goods by a taxable person, such as a sale of a car, bike, etc., is not considered as supply under GST. This is because personal goods are not used in the course of or in furtherance of the business.

3. Gifts:

Gifts received by a taxable person up to a value of Rs.50,000 in a financial year are not considered as supply under GST. However, gifts exceeding this limit are considered as supply and are subject to GST.

4. Services Provided by a Court, Tribunal or Authority:

Services provided by a court or tribunal, or any authority set up by law for the administration of justice, are not considered as supply under GST.

5. Pure Renting:

Pure renting of a residential or commercial property for residential or commercial purposes is not considered as supply under GST. However, renting of a property for events or any other purpose, such as renting of a banquet hall, is considered as supply under GST.

Conclusion:

In conclusion, it is imperative for every taxpayer to understand what is considered as supply under GST and what is not. This will help them in determining their tax liabilities and filing their GST returns accurately. By understanding the matters to be treated as supply and not to be treated as supply, taxpayers can avoid any discrepancies and ensure that they are GST compliant.

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Updated on:
March 16, 2024