Simple Ways to Determine the Supply of Goods and Services in GST


March 30, 2018

Goods and Services in GST

What is meant by Supply of Goods and Services?

The supply of Goods and Services under the GST is the taxable entity. All the indirect taxes in the old taxation structure such as Service Tax, VAT/CST, Central Excise are subsumed under GST (Goods and Service Tax). With this subsumption, the concept of sales, manufacture of goods and the services will be irrelevant. There are some indirect taxes that are included in the GST. The taxes that are not included in the GST: Basic Customs Duty, Exports Duty, Road & Passenger Tax, Toll Tax, Property Tax, Stamp Duty and Electricity Duty.

The various types of supply to be considered are as follows:

TRANSFER Any transfers between sections form a part of supply and are taxable.
SALE Any sale of goods or services which entirely result in the transfer of title in case of goods, and transfer of benefit to use in case of services.
EXCHANGE When the compensation is paid through goods instead of money.
RENT Renting of property furnished or partially is a supply under GST
LICENSE Any grant of license to use forms is the part of supply such as online subscriptions
DISPOSAL Disposal of business assets comes under supply
LEASE Letting out the building or property on lease is a supply under GST

Methods to Determine the Supply of Goods and Supply of Services in GST

If you go through the schedule-II of the draft GST law, there it clearly explains the methods used in determining the supply type in terms of goods and services independently. It will clear all doubts regarding the dilution of current indirect tax system such as Service Tax, VAT, custom duty and others. It is very important for business firms to understand the difference between the supply of goods and supply of services to get better knowledge. The draft GST law enlists the transaction related to land and property, transfers, third party goods, work contract, rent, lease, etc.

Sl.No Forms of supply Treated as supply of? Example
1 Any transfer of the title in goods Goods Electronic Store sold laptop to Mr. Deepak. This will be treated as supply of goods, because on sale, the title of the laptop is transferred to Mr. Deepak.
2 Any transfer of goods without transfer of title Services Electronic Store supplied laptop to Mr. Ram, on rental basis, for a period of 4 months.

This amounts supply of service because laptop is transferred for Mr. Ram usage, and the title of the laptop is still with Electronic Store.

3 Any transfer of title of goods under an agreement which stipulates that property in goods will pass at a future date upon payment of full consideration as agreed. Goods Electronic Store supplied laptop to Mr. Prakash in an agreement to receive payments in 6 installments.

This amounts supply of goods, because the title of the laptop will pass on to Mr. Prakash on completing the payment installments.

Typically, all hire purchase will qualify under this section.

4 Any lease, easement, tenancy, and licence to occupy land Services Mr. Mahesh lets out land on lease to Electronic Store. The letting out of land on lease is considered as supply of services.
5 Any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly Services Mr. Mahesh lets out a building to Electronic Store. Electronic Store used the building for display and sale of laptop.

This is a supply of services.

6 Job work – Any treatment or process which is being applied to another person’s goods Services Electronic Store also undertakes repair works of the laptop of their customers.

The repair activity will be treated as supply of service.

7 Business assets put to private use or non- business use whether or not for a consideration Services Car used for business is put to private use. This is a supply of services.
8 Renting of immovable property Services Renting of shop premises is considered as supply of services.
9 Development, design, programming, customisation, adaptation, up-gradation, enhancement, implementation of information technology software Services SAG Infotech Pvt Ltd developed a payroll software for Furniture House. The development of software is a supply of services.
10 Works contract, including transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract of immovable property Services Sharma Construction Ltd constructed a commercial complex involving material and labour.

This is a supply of services.

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One Reply to “Simple Ways to Determine the Supply of Goods and Services in GST”

  1. I am individual registered dealer under GST and have valid GSTIN . I intend renting out commercial property for business purpose.
    Will it come under the purview of services. If so What is SAC code, tariff no, heading, Rate.

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