Taxable events and rate of tax differ from one taxable person to another under the current/erstwhile indirect tax regime. These include Central tax upon removal of excisable goods; VAT on the sale of goods; Service tax on the provision of taxable services. Under the GST regime, the supply of goods and services amounts to being a taxable event. The GST proposes to subsume and unify all taxes such as the excise, service tax, and the VAT/CST therefore, manufacturing goods, sale of goods, and providing services will not be considered as relevant. Businesses and dealers are therefore required to understand how the supply of the relevant good or service sets out the scope for levying a particular amount of tax.
Supply under the GST:
Supply means and includes the provision of goods and services in exchange for a consideration, done during the course of or in furtherance of a business. It includes goods or services to be supplied or already supplied. Under the law, there are several types of supplies that are also taken into account even when a considerable amount is not involved. Supply can be categorized as follows –
- When a supply is made for consideration during the course/furtherance of a business;
- When a supply is made without a considerable amount;
- When a supply is made for consideration however may or may not be during the course/furtherance of a business; and
- When a supply is made for a considerable amount during the course/furtherance of a business.
We have put together a brief overview of some cases where the transaction is considered to be a supply with consideration, such as –
|Sale||A sale occurs when a good or service results in the transfer of the ownership and the possession of title pertaining to the good and right to utilization when it pertains to service.|
|Transfer||A transfer may take place between the branches of an establishment in which case such a transaction is taxable. Nonetheless, tax paid on such a transaction may be claimed as an input tax credit.|
|Barter / Exchange||Barter takes place when the consideration for a good or supply is another good or supply instead of monetary consideration. An exchange takes place when a single product is exchanged for another.|
|License||Granting a license to another taxable person to use a particular product or service means transferring the right to use (but not ownership) and thus forms a part of supply; such as making online subscriptions.|
|Rental||Under the GST, renting a property either wholly or in part amounts to a supply transaction.|
|Lease||Just like renting, even letting or leasing property under the GST amounts to a supply transaction.|
|Disposal||Disposal (including permanent disposal) of assets such as business assets, capital assets, etc. forms a part of a supply transaction under the GST.|