3 min
19 Aug 2024
Any supply of goods or services made in the course of business, whether voluntary or mandatory, is subject to GST. The concept of supply ensures a broad tax base, encompassing most economic activities, thereby streamlining the tax system and enhancing compliance and revenue collection.
What is supply under GST?
Under the Goods and Services Tax (GST) regime, 'supply' encompasses all forms of transactions involving goods and services. It includes sales, transfers, barters, exchanges, leases, rentals, and disposals made for a consideration. Supply forms the backbone of GST as it determines the taxability of transactions.
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What is supply under GST?
Under the Goods and Services Tax (GST) regime, 'supply' encompasses all forms of transactions involving goods and services. It includes sales, transfers, barters, exchanges, leases, rentals, and disposals made for a consideration. Supply forms the backbone of GST as it determines the taxability of transactions.
What are the three components or elements of supply under GST?
Goods
- Tangible products that are movable and used in commerce.
- Includes items like raw materials, finished goods, and consumables.
- Subject to GST based on the HSN code and applicable rate.
Services
- Intangible activities performed for consideration.
- Encompasses professional services, maintenance services, and more.
- Taxed under GST according to the SAC code and relevant rate.
Consideration
- Payment made in exchange for goods or services.
- Can be monetary or non-monetary (barter).
- Essential for determining the transaction's taxability under GST.
Types of supply under GST
Taxable supply
- Transactions subject to GST.
- Includes most sales and services.
- GST rate varies based on HSN/SAC codes.
Exempt supply
- Transactions not subject to GST.
- Includes specific essential goods and services.
- No GST rate applicable.
Zero-rated supply
- Exports and certain specified supplies.
- Attract a GST rate of 0%.
- Allows for input tax credit refunds.
Composite and mixed supply
- Bundled supply of goods/services.
- GST rate depends on the principal supply.
Scope: List of supplies and taxability
The scope of supply under GST is extensive, covering a wide range of transactions and activities.Supplies
- Goods: Encompasses tangible products used in business, ranging from raw materials to finished products.
- Services: Includes all services rendered for a consideration, such as professional services, maintenance, and repairs.
- Barter: The exchange of goods or services without money.
- Exchange: Involves trading goods or services for other goods or services.
- Lease/Rental: Providing goods or services temporarily in exchange for payment.
- Disposal: Includes any sale or transfer of goods or services.
Taxability
The taxability of these supplies depends on the nature of the transaction and its classification under GST:- Taxable Supply: These are subject to GST at varying rates based on HSN or SAC codes. Examples include most sales and services provided in the course of business.
- Exempt Supply: Specific goods and services are exempt from GST, such as healthcare services and educational services.
- Zero-Rated Supply: Certain supplies like exports and specific notified goods/services are zero-rated, meaning they attract a 0% GST rate but allow for input tax credit refunds.
- Composite Supply: A combination of goods or services where one is a principal supply, and the GST rate of the principal supply applies.
- Mixed Supply: A bundle of supplies where each item can be separately identified, and the highest GST rate applicable to any item in the bundle applies.
Features of GST
The GST framework's inclusive definition of supply ensures a comprehensive tax base, reducing complexities and enhancing tax compliance. It covers most economic activities, providing a streamlined taxation system beneficial for businesses and consumers alike. Know more about the features of GST.Supplies where there are multiple goods and/or services involved
Composite supply
- A combination of goods and/or services that are naturally bundled and supplied together.
- Principal supply dictates the GST rate.
- Example: A car sale with a warranty service.
Mixed supply
- Two or more independent goods and/or services supplied together.
- Highest GST rate among the items applies.
- Example: A gift pack containing chocolates and toys.
Conclusion
Understanding the intricacies of supply under GST is crucial for businesses to ensure compliance and optimise tax benefits. The comprehensive coverage of transactions under GST simplifies the tax system and aids in efficient tax collection.Explore the Bajaj Finserv Business LoanFor businesses, especially those relying on logistics and transportation, securing a business loan can provide the necessary financial support to streamline operations and invest in better resources to handle these challenges efficiently. Here are some of the key advantages of a business loan from Bajaj Finance that make it an ideal choice for your business expenses:
- Rapid disbursement: Funds can be received in as little as 48 hours of approval, allowing businesses to respond promptly to opportunities and needs.
- Simplified application process: Online applications streamline the process, reducing paperwork and saving time.
- Competitive interest rates: The interest rates for our business loans range from 14% to 30% per annum.
- Flexible repayment schedules: Repayment terms can be tailored to align with the business's cash flow, helping manage finances without strain. You can choose a tenure ranging from 12 months to 96 months.
