Menu

Cyber Records

GOODS AND SERVICES TAX

GST is on supply of goods and services. There are four Categories of GST under the Act.

Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST) are levied on the supply in goods and services wherein the supplier and receiver of goods and services are within the state. Further in the case of supply of goods and services within the union Territories of India CGST and UTGST are levied. 

Integrated Goods and Services Tax (IGST) is levied on the supply of goods and Services between Two States or Union Territories of India. Further IGST is also levied on the import of goods and services from the place of outside India to the place of imports in India. The rates of GST are contained in the scheduled to the GST Act.

Goods and services Tax are normally payable by the supplier of  goods and services. But in some cases the receiver of goods and services is required to pay the under the reversal charge system. The receiver of goods from not registered supplier of taxable goods in some cases covered under the reversal charge system. Further there are services by goods transport agency, sponsorship services and so on are covered under the reversal charge system.

Cyber Records provide the professional services on Goods and Services Tax. We serve the client on registration, filings and consultations on various aspects of GST law. 

 

SUPPLY OF GOODS AND SERVICES

The concept of “supply” is key point in the GST regime. The scope of supply taxable under GST takes into following factors

  1. Supply should be of goods or services.

Goods means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply. Service means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged. The supply of other than goods and services does not attract GST. It is important note here that supply of money or securities does not attract GST as they are not goods. However the currency exchange services and stock trading services are covered under the GST.

  1. Supply should be made for a consideration.
  1. Consideration in relation to the supply of goods or services or both includes any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government,
  2. The monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government.
  3. However, a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply.

There should be consideration for the supply of goods or services. If there is no consideration then GST does not attract. However consideration does not always means money. It covers anything which might be possibly done, given or made in exchange for something else. Further a consideration need not always flow from the recipient of the supply. It can also be made by a third person.

  1. Supply should be made in the course of or furtherance of business.

Business includes

  1. any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit;
  2. any activity or transaction in connection with or incidental or ancillary to sub-clause (a);
  3. any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction;
  4. supply or acquisition of goods including capital goods and services in connection with commencement or closure of business;
  5. provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members;
  6. admission, for a consideration, of persons to any premises;
  7. services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation;
  8. services provided by a race club by way of totalisator or a licence to book maker in such club ; and
  9. any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities;

GST is a tax on commercial transactions. Hence, only those supplies that are in the course or furtherance of business qualify as supply under GST. The supplies made by an individual in the personal capacity do not come under the scope of GST unless they fall within the definition of business.

  1. Supply should be made by taxable person. Taxable person means a person who is registered or liable to be registered under the GST. Hence, even an unregistered person who not is liable to be registered, but has taken voluntary registration is also a taxable person. Supply between two non-taxable persons to a taxable supply which attracts GST. It is important to note that supply can be made by taxable person to a non-taxable person. The restriction of being a taxable person is only on the supplier whereas the recipient can be either taxable or non-taxable. Further, there is no condition that the supply needs to be made to another person. Supplies made to self are also taxable. For example stock transfers made between branches of the same company.
  1. Supply should be a taxable supply. Taxable supply means a supply of goods or services or both which is leviable to tax. The taxable supply only taxed under GST.There exemptions to specified goods or services or specified entities or persons. Schedule II to GST Act specifies particular transaction is a supply of goods or services and Schedule III specifies transactions or activities which shall be neither treated as supply of goods nor a supply of services.

COMPOSITE AND MIXED SUPPLIES

A composite supply comprising of two more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply. A mixed supply comprising of two or more supplies shall be treated supply of that particular supply tat attracts highest rate of Tax.

GST is payable on individual goods or services or both at the specified rates. However, in certain cases, supplies are not clearly identifiable supplies. Some supplies are a combination of goods or combination of services or combination of goods and services and each individual component of such supplies may attract a different rate of Tax. The GST law identifies composite and mixed supplies and provides certainty in respect of tax treatment under GST for such supplies.

The rate of GST for composite supply is that the rate of GST of the principal supply in the case of composite supplies of goods or services or both. The principal supply means the supply of goods or services which constitutes the predominant element of composite supply and to which any other supply forming part of that composite supply is ancillary. For example, when a consumer buys a television set and also gets warranty and maintenance contract with the TV, this supply is composite supply and TV is the principal supply and warranty and maintenance supply is ancillary.

The rate of GST in the case of mixed supplies of goods or services or both is determined on the basis of the rate of tax which attracts highest rate of Tax. A supply of package of canned foods, sweets, chocolates, cakes, dry fruits, aerated drink and fruit juices when supplied for a single price is mixed supply. Each of these items can be supplied separately and is not dependent on each other. In this case the GST rate for the entire package is determined based on the highest rate of the items included in the package.