Supply Covered by the GST

Supply Covered by the GST – Scope of Supply

 

The term "supply" has gained prominence in the taxation system in India since the implementation of the Goods and Services Tax (GST). As a result, it's critical to comprehend what the GST term "supply" actually means. In this blog, we'll examine the GST definition of "supply" as well as the various kinds of supplies that might be made.

 

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Prior to the GST

 

Under the prior indirect tax system, the notion of supply was absent. The phases at which indirect taxes were levied varied across tax regimes. On manufactured goods as they were taken out of the factory, "excise duty" was assessed. The 'point of taxation' principles served as the foundation for the calculation of the 'service tax' for the services rendered. A VAT would be based on how much was spent on the sale of goods or the provision of services. By merging all taxes, the existing structure keeps a single taxable event.

 

What Does Supply Mean in the GST?

 

Understanding the GST Act's definition of "supply" is crucial before understanding what that term means in relation to the tax. According to section 7 of the GST Act, a "supply" is any form of provision of goods or services, or both, provided or agreed to be supplied for consideration by a person in the course or advancement of business. Examples include sale, transfer, barter, exchange, licence, rental, lease, or disposal. This means that any transaction in which products or services are exchanged for money or any other form of payment would be regarded as a "supply" for purposes of the GST.

 

Composite supply and Mixed Supply

 

There are two sorts of supplies under GST: taxable supplies and exempt supplies. Any supply that is due for tax and is covered by GST is considered a taxable supply. This comprises products and services that are subject to GST and must be paid for. A supply that is exempt from GST and therefore not subject to taxation is referred to as an exempt supply. Examples of excluded goods include necessities such food grains, fruits, and vegetables, among others.

 

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There are other special supply categories known as "Composite Supply" and "Mixed Supply" in addition to these two. Composite Supply is a type of supply that consists of two or more taxable supplies that are naturally combined for one price in the regular course of business. A restaurant that offers a combo meal that includes food and drinks for one price is an example. A mixed supply is made up of two or more separate supplies, wherein one or more of the supplies are subject to taxes and one or more of the supplies are not. An illustration would be a restaurant that serves meals with food and drinks, some of which are taxed and others of which are not.

 

It's crucial to recognize that any transaction involving the exchange of goods and services for cash or another form of payment is regarded as a "supply" for purposes of the Goods and Services Tax (GST). In order to maintain compliance with GST requirements, it is crucial to appropriately classify each transaction as a taxable or exempt supply.