Taxable Event in GST Regime, Meaning and Scope of Supply under GST: The taxable event is the point of time when tax is to be levied on the transaction or activity or any action. Presently, we are equipped with the levy of taxes under indirect taxes regime at different point of time and under different laws. The principle among them which directly or indirectly affects the greater mass of population is 'Sale' under VAT, 'Manufacture' under Excise and 'Provision of service or Agreement of provision of Service' under Service tax.
Taxable Event in GST RegimeThe new tax reforming law which is going to be reality by July 2017 is proposing to shift all such different levies under various taxation under one single levy and under single law. The new taxable event which will subsume all the above mentioned present levied is named as 'Supply'. In other words, under GST regime, if there is Supply then there is levy and liability to pay tax will arise.
Meaning of SupplyAs per Section 7 of the CGST law, the meaning of supply is defined as under:-
The term supply includes-(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; Analysis - It largely includes all sorts of transactions which are presently covered under sales tax, excise and service tax. It seems that it takes land also in its purview and therefore there is specific exclusion of land from the term supply as mentioned in later part of this article.
- Permanent transfer or disposal of business assets where input tax credit has been availed on such
- Supply of goods or services or both between related persons or between distinct persons as specified in section 25, when made in the course or furtherance of business:
- Provided that gifts not exceeding fifty thousand rupees in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both.
- Supply of goods between agent and principal when they undertake to supply such goods on behalf of each other
- Import of services by a taxable person from a related person or from any of his other establishments outside India, in the course or furtherance of business.
Exclusion from the definition of supply -
- Services by an employee to the employer in the course of or in relation to his employment.
- Services by any court (District Court, High Court and Supreme Court) or Tribunal established under any law for the time being in force.
- The functions performed by the Members of Parliament, Members of State Legislature, Members of Panchayats, Members of Municipalities and Members of other local authorities.
- The duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity
- The duties performed by any person as a Chairperson or a Member or a Director in a body established by the Central Government or a State Government or local authority and who is not deemed as an employee before the commencement of this clause.
- Services of funeral, burial, crematorium or mortuary including transportation of the deceased.
- Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building.
- Actionable claims, other than lottery, betting and gambling.
- Such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of
Declared Supply of goods or servicesThe Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated as—
- a supply of goods and not as a supply of services; or
- a supply of services and not as a supply of goods.
Taxability on a composite or a mixed supplyA composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply. A mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax.
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