What would be taxed under GST- the taxable event

What would be taxed under GST- the taxable event

Taxable event under GST

The GST regime has introduced a new concept for taxable event. While under the earlier regime, the taxable event was:

Provision of service for Services, Sale of goods for VAT, Manufacture of goods for Excise and so on, GST would have “Supply of goods and services” as the new taxable event

Let’s understand what does “Supply of goods and services” mean:

  • It includes all forms of supply of goods and/or services such as- sale, transfer, barter, exchange, license, rental, lease or disposal.
  • It also includes importation of service
  • The transaction between principal and agent shall also be deemed to be a supply.
  • The supply of any branded service by an aggregator under a brand name or trade name owned by him shall be deemed to be a supply of service by the aggregator

The model GST law also provides for including certain transactions made without consideration within the scope of supply.

Principle elements which a supply must have:

  1. It must be a supply of goods and services
  2. There should be a consideration
  3. It must be in furtherance to business
  4. It must be conducted in the taxable territory
  5. It must be done by a taxable person

Some common questions to clarify the scope and meaning of “supply of goods and service”

1.An individual buys a car for personal use and after a year sells it to a car dealer. Will this transaction be a supply?

No, because supply is not made by the individual in furtherance of business, as it was meant for non-business use.

2.A dealer of air-conditioners transfers an air conditioner from his stock in trade, for personal use at his residence. Will the transaction constitute a supply?

Yes. business assets put to a private or non-business use without consideration will be treated as supply.

3.Whether provision of service or goods by a club or association or society to its members will be treated as supply or not?

Yes. Provision of facilities by a club, association, society or any such body to its members shall be treated as supply.

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