BASIS OF CHARGE OF GST- SUPPLY

In pre-GST regime, goodswere liable to: (i) Excise Duty- on manufacture of goods; (ii) VAT/CST- on sale of goods; (iii) Entry tax- on entry of goods in specified in local area;(iv) Custom Duty- on import of goods. Services were liable to service tax. The rates of tax on goods were different from rates of tax on services.

Under GST both goods and services are treated and taxed alike. The basis of levy and collection of GST is also one i.e. ‘Supply’. Thus, under GST supply is the taxable event.

Important features of supply

Supply refers to transactions that take place in course of business. Supply includes:

(i) Sale, transfer, barter, exchange, licence, rental, lease or disposal of goods and or services.

(ii) Importation of services for a consideration.

(iii) Services without consideration as stated in Schedule-I.

(iii) Matters stated in Schedule-II.

(iv) Activitiesthe Central Government may by notification specify to be treated:

(a)   A supply of goods and not a supply of services;

(b)   A supply of services and not a supply of goods;

(c)    Neither a supply of goods nor supply of services.

Activities or transactions excluded from supply

(i) Activities or transactions not to be treated as supply as per Schedule-III.

(ii) Activities or transactions of the Central Government or State Government or local authority not to be treated as supply Schedule-IV.

TYPES OF SUPPLY

For the purposes of levy of GST, supply of goods and/or services have been classified in two categories: (i)Intrastate supplies (ii) Interstate supplies.

Intrastate supplies

Supply of goods and/or services that originate and also terminate in the same state is an intrastate supply. The Central Government and the State Government shall simultaneously levy CGST and SGST on such transactions.

Interstate supplies

Supply of goods and/or services that originate from one state but terminate in to another statei.e.the destination state is different from the state of origin has been termed as supply in course of interstate trade or commerce.