Supply under GST, classification, goods and service tax b.com 3rd year, goods and service tax bcom

Key Concepts

• Supply: The event that triggers GST imposition.
• Consideration: Something of value exchanged in return for goods or services.
• Course or Furtherance of Business: Activities related to promoting or expanding a business.
• CGST Act 2017, Section 7(1): Defines the scope of supply under GST.
• Schedule I: Lists activities treated as supply even without consideration.
• Input Tax Credit (ITC): Credit for taxes paid on inputs used in business.
• Inward Supply: Purchase of goods or services.
• Outward Supply: Sale of goods or services.
• Taxable Supply: Supply on which GST is levied.
• Non-Taxable Supply: Supply outside the scope of GST (e.g., alcoholic liquor for human consumption).
• Exempt Supply: Supply on which nil rate is applicable.
• Zero-Rated Supply: Export of goods/services or supply to SEZ.
• Nil-Rated Supply: Supply with a 0% GST rate.
• Intra-State Supply: Supply within the same state (CGST + SGST).
• Inter-State Supply: Supply between different states (IGST).
• Composite Supply: Naturally bundled goods/services supplied together.
• Mixed Supply: Goods/services that can be supplied separately but are sold together.

GST Supply: Meaning and Types

Introduction to Supply under GST

The video explains the meaning and types of "supply" under the Goods and Services Tax (GST) regime in India. GST is an indirect tax levied on the supply of goods and services. Understanding the definition of supply is crucial because GST is imposed only when a supply occurs.

Defining Supply: Section 7(1) of CGST Act 2017

Section 7(1) of the Central Goods and Services Tax (CGST) Act, 2017 defines the scope of supply. It outlines the conditions under which a transaction is considered a supply and thus subject to GST. The section is divided into three clauses: A, B, and C.

Clause A: All Forms of Supply with Consideration and in the Course of Business

Clause A covers "all forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business."

• Forms of Supply: Includes sale, transfer, barter, exchange, license, rental, lease, and disposal.
• Consideration: A crucial element; there must be something received in return for the goods or services.
• Course of Business: The supply must be related to the business's activities or to further its objectives.

Example: A company manufacturing markers sells them. This is a supply because it's a sale (form of supply), there's consideration (money received), and it's in the course of the company's business.

Example (Non-Supply): A laptop company distributes markers for free. There's no consideration, so it's not a supply. If the company sells the markers, there is consideration, but it is still not a supply because selling markers is not in the course of the company's business (they manufacture laptops).

Key Takeaway: For a transaction to be considered a supply under Clause A, both consideration and a connection to the business are mandatory.

Clause B: Import of Services with Consideration

Clause B states that "import of services for a consideration whether or not in the course or furtherance of business" is also considered a supply.

• Import of Services: Receiving services from outside India.
• Consideration: Must be present.
• Course of Business: Irrelevant; the import is considered a supply regardless of whether it's related to the business.

Key Takeaway: If services are imported for consideration, it's a supply, even if it's not related to the business.

Clause C: Activities Specified in Schedule I Without Consideration

Clause C covers "the activities specified in Schedule I, made or agreed to be made without a consideration." This means certain activities are treated as supply even if there's no exchange of value.

• Schedule I: Lists specific activities.
• Without Consideration: No payment or exchange is required.

Example 1: Permanent transfer or disposal of business assets where input tax credit (ITC) has been availed. If a business permanently transfers an asset on which they claimed ITC, it's considered a supply, even if it's given away for free.

Example 2: Gifts from an employer to an employee exceeding ₹50,000. If the value of the gift exceeds this amount, it's treated as a supply, even though the employee isn't giving anything in return.

Key Takeaway: Certain activities listed in Schedule I are considered supply even without consideration.

Types of Supply

The video then discusses different types of supply based on various criteria:

1. Based on Movement of Goods and Services

• Inward Supply: Goods or services coming into the business (purchases).
• Outward Supply: Goods or services going out of the business (sales).

2. Based on Continuity

• One-Time Supply: A single, isolated transaction.
• Continuous Supply: Supply that occurs over a period of time in installments.

3. Based on Taxability

This is a crucial classification for exam purposes.

• Taxable Supply: Supply on which GST is levied.
• Non-Taxable Supply: Supply outside the scope of GST. Example: alcoholic liquor for human consumption.
• Exempt Supply: Supply on which nil rate is applicable. Includes both nil-rated and non-taxable supplies.
• Zero-Rated Supply: Export of goods/services or supply to SEZ.
• Nil-Rated Supply: Supply with a 0% GST rate.

Key Distinction: Zero-rated supply is not the same as nil-rated supply. Zero-rated supply refers specifically to exports and supplies to SEZs, while nil-rated supply refers to supplies that attract a 0% GST rate.

4. Based on Geographical Location

• Intra-State Supply: Supply within the same state. Subject to CGST and SGST.
• Inter-State Supply: Supply between different states. Subject to IGST.

5. Based on Bundling (Conjunction)

• Composite Supply: Naturally bundled goods/services supplied together. Example: Buying a TV with installation included.
• Mixed Supply: Goods/services that can be supplied separately but are sold together. Example: A gift hamper containing various items.

Key Takeaway: Taxability of composite and mixed supplies is an important topic for exams.

Conclusion

The video provides a comprehensive overview of the meaning and types of supply under GST. It emphasizes the importance of understanding Section 7(1) of the CGST Act, 2017, and the various classifications of supply for determining GST liability. The distinction between different types of supplies, especially taxable, non-taxable, exempt, zero-rated, and nil-rated supplies, is crucial for exam preparation.