In the indirect tax regime, the taxable event for each type of tax is different. For instance, Central Excise on removal of excisable goods, VAT on sale of goods, and Service Tax on provision of taxable services. With the onset of GST, all these complexities will be replaced with the taxable event being the Supply of Goods and/ Services. This post is an attempt to explain the significance of supply which sets the scope of transactions liable for the levy of GST.
The term ‘supply’ under GST comprises all types of supply of goods and/ or services, that are supplied, or to be supplied for a consideration in the course of, or for furtherance of business. But, there are also specific type of supplies mentioned in the GST law which need to be considered as supply even without a consideration.
What are the different types of supplies?
- Supplies made, or to be made for a consideration in the course of, or for furtherance of business.
- Supplies without consideration.
- Supplies made, or to be made for a consideration, whether in the course of, or for furtherance of business.
Supplies of goods/ services made with consideration includes all forms of supply such as sale, transfer, barter, exchange, license, rental, lease or disposal, and even importation of services, such that they are made – or agreed to be made – for a consideration in the course or furtherance of business.
- Sale: Supplies made between branches are taxable, but the GST levied on this type of supply (transfer goods) can be availed as Input Tax Credit (ITC).
- Barter/ Exchange: Supplies made with the purpose of barter. For instance, Mr. A. seller supplies air conditioner raw materials to Mr. B buyer, and Mr. B gives LED bulbs in exchange of the air conditioner raw materials to Mr. A instead of money. Or, Mr. A seller – has supplied goods to Mr. B buyer. Mr. B supplies goods to the extent of payment.
- License:Supplies made with the purpose of granting a license to use, is a part of supply, such as online subscriptions.
- Transfer: When there is any sale of goods and/ or services, which results in the transfer of title in case of goods, and or transfer of right to use in case of services, forms a part of supply.
- Rental: Supplies made with the purpose of renting of property fully or partially is a supply under GST
- Lease: Supplies made with the purpose of letting out the building or property on lease is a supply under GST
- Disposal: Supplies mad with the purpose of disposal of business assets, is a forms part of supply