GST DUNIYA. (Part – 7)Aayushi Bansal
Hope you had read the previous parts of the GST Duniya series, if not, then read it from here:
Today we will discuss about Concept of supply in GST
Meaning and Scope of supply (Section 7)
Supply includes all forms of supply of goods and /or services such as sale, transfer, barter, exchange, license, rental, lease or disposal for consideration. Consideration can be either in form of monetary consideration or non-monetary consideration.It means consideration can be either in form of money or either through barter system. Barter system means supply of goods or services in return of goods or services.
In terms of Schedule I to the CGST Act, following are to be treated as supply even ifmade without consideration:
- Permanent transfer or disposal of business assets where input tax credit has been availed on such business assets.
- Supply of goods or services between related persons or between distinct personsas specified in Section 25, when made in the course or furtherance of business.
However, gifts not exceeding Rs. 50,000 in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both.
The following shall also be treated as supply of goods:
Supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration.
PLACE OF SUPPLY
In GST regime, we would first determine as whether place of supply is in INDIA or is outside INDIA. We determine this because if supply takes place in India,then GST will apply anfd if place of supply is outside India,then GST will not apply.
While determining the levy of taxes based on Place of Supply, two things are considered namely:
Location of Supplier: It is the registered place of business of the supplier
Place Of Supply: It is the registered place of business of the recipient
So,for determination of GST application,it is important to determine location of supplier and place of supply.
For e.g. if place of supply is Karnal which is located in India,then on transaction, GST will apply at prescribed rate. But if place of supply is Canada,which is ousideIndia,then GST will not apply.
Now the next point comes where CGST and SGST will levy and where IGST will levy, so I would like to explain this point, where place of supply and location of Supplier are within same state,then this transaction will be considered as Intra State Supply and CGST and SGST will levy. On contrary, when location of supplier and place of supply are in different states, then IGST will apply.
Here are some examples explaining the above points:
Example 1: Lets assume location of supplier is Karnal and Place of supply is Kurukshetra, then as both are within same state,then this transaction shall be Intra state Supply and CGST as well as SGST shall apply.
Example 2: Lets assume location of supplier is Karnal and place of supply is Nangal, then in this case, since place of supply and location of supplier are in different states, then it shall be Inter state supply and IGST shall be levy.
It would also determine the place of levy. Most transactions are expected to be taxed at therate prevailing at the destination. There would be some exceptions in regard to services and afew in regard to goods.
Section 7 of the IGST Act provides that place of supply of goods shall, depend on the locationof the supplier and place of supply.Inter State supply of goods means supply of goods between two states. And intra state supply of goods means where supply of goods takes place in same state.
Time of Supply (Sections 12 & 13 of the CGST Act)
Now the next point is at which time,GST will levy. It means even in one transaction, many events takes place like if one person is purchasing goods from another, then following events shall take place like seller makes invoice and another event is at the time seller received payment.Then issue is at what time GST will apply.
The liability to pay CGST/SGST on the goods shall arise at the time of supply. The time ofsupply of goods would be earlier of the following dates, namely:
(a) the date of issue of invoice by the supplier or the last date on which he is required toissue the invoice with respect to the supply; or
(b) the date of receipt of payment by the supplier
For e.g. if Mr.A issues invoice on 18thapril 2018 and payment is received on 20th may 2018, then time of supply shall be 18thapril 2018.
Another e.g.is let us assume if Mr. A issues invoice on 22nd may 2018 but receives payment on 20thfeb 2018, then in this case time of supply shall be 20thfeb 2018.
However, in case of reverse charge basis, the time of supply shall be the earliest of the following date, namely: –
(a) the date of receipt of goods, or
(b) the date of payment as entered in the books of account of the recipient or the date onwhich the payment is debited in his bank account, whichever is earlier; or
(c) the date immediately following 30 days from the date of issue of invoice or any otherdocument, by whatever name called, in lieu thereof by the supplier:
In case of service, the time of supply shall be earlier of the following dates, namely: –
(a) the date of issue of invoice by the supplier if the invoice is issued within the prescribedperiod (i.e. 30 days)
(b) The date of provision of service, if invoice is not issued within the prescribed period
(c) The date on which the recipient shows the receipt of services in his books of account, inthe case (a) and (b) do not apply.
Now the last but not the least point cover in this part is Value of Supply.
Valuation is another important point takes place in Concept of Supply. Under GST, Value of supply shall be taken as Transaction Value is taken as Value of supply on which GST will levy at prevailing rates.
In next part,we will discuss about GST Penalties and Appeals as various queries from our readers are coming on Penalties and Appeals under GST.
So, Don’t miss it.
In case of any query related to above article, the questions can be asked by commenting in the comment box or the author can be contacted personally at firstname.lastname@example.org or email@example.com
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