The law of supply explains the reaction of the supplier when the prices in the market change. Market supply, short-term supply, long-term supply, joint supply, and composite supply are five types of supply.
Every registered person who has made outward supplies in the period between the date on which he became liable to registration till the date on which registration has been granted shall declare the same in the first return furnished by him after grant of registration.
Advantages of GST
- GST eliminates the cascading effect of tax.
- Higher threshold for registration.
- Composition scheme for small businesses.
- Simple and easy online procedure.
- The number of compliances is lesser.
- Defined treatment for E-commerce operators.
- Improved efficiency of logistics.
- Unorganized sector is regulated under GST.
TYPES OF 'SUPPLY' UNDER 'GST' REGIME
- Supply. Section 7 of the Act defines the term 'supply' including-
- Composite Supply.
- Continuous supply.
- Inward supply.
- Outward supply.
- Mixed supply.
- Taxable supply.
- Non taxable supply.
Reverse Charge Mechanism under GST is a mechanism under which the usual cycle of tax payment is reversed. Under Reverse Charge, the recipient pays to the supplier an amount exclusive of GST, the recipient then pays the GST directly to the Government. RCM is a complex concept that works in select scenarios only.
What does supply mean under GST?
- Supply should be of goods or services.
- Supply should be taxable.
- Supply should be made by a taxable person.
- Supply should be made within a taxable territory.
- Supply should be made in exchange for cash or reward (consideration).
Transaction value is the price actually paid(or payable) for the supply of goods/services between un-related parties (i.e., price is the sole consideration) The value of supply under GST shall include: Any taxes, duties, cess, fees, and charges levied under any act, except GST.
Imports of Goods and Services will be treated as inter-state supplies and IGST will be levied on import of goods and services into the country. The incidence of tax will follow the destination principle and the tax revenue in case of SGST will accrue to the State where the imported goods and services are consumed.
Under GST, a mixed supply means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply; It shall not be a mixed supply if these items are supplied separately.
It is the supply of goods and services that does not attract GST and allows no claim on ITC. Example: Bread, fresh fruits, fresh milk and curd etc. Exempt supply is defined in section 2(47) of GST Act.
Two Principles That Define GST
To elucidate the above definition, we can say that GST is based on two principles: 'Destination Principle' and 'Value Added Principle. 'Destination Principle' states that the supply of goods and services would be taxed at the point of consumption.Time of supply under RCMIn case of reverse charge, the time of supply for goods shall be the earliest of the following dates: the date of receipt of goods. the date of payment* the date immediately after 30 days from the date of issue of an invoice by the supplier.
Nature of Supply and Place of supply are two of the most important concepts under GST. Determination of Nature of supply is very important to determine whether a supply is inter-state or intra-state. CGST and SGST will be levied on intra-state supply while inter-state supplies will be charged to IGST.
“Taxation should seek to be neutral and equitable between forms of commerce. Business decisions should be motivated by economic rather than tax considerations. Businesses in similar situations carrying out similar transactions should be subject to similar levels of taxation;”
Inter-state supply of goods - As per section 7(1) of IGST Act, supply of goods in the course of inter-State trade or commerce (i.e. from one State to another) means any supply where the location of the supplier and the place of supply are in two different States or two different Union Territories or a State and Union
If a transaction falls under intra state supply then it attracts CGST & SGST/UGST and if a transaction falls under interstate supply it attracts IGST. Shall be treated as supply of goods in course of inter-state trade or commerce.
An Out-of-Scope Supply is a supply which is not made in Singapore (for example, sale of goods from China to India where the goods do not enter Singapore). Since these supplies fall outside the scope of Goods & Services Tax (GST), GST is not chargeable on these supplies.
Who introduced GST in India? Prime Minister Narendra Modi launched GST into operation on the midnight of 1 July 2017. But GST was almost two decades in the making since the concept was first proposed under the Atal Bihari Vajpayee government.
The composite supply will qualify as supply of goods and the provisions relating to time of supply of goods will apply. If the highest tax rate belongs to a service then the mixed supply will be treated as the supply of services. The provisions relating to time of supply of services would be applicable.
The Indian tax system is well structured and has a three-tier federal structure. The tax structure consists of the central government, state governments, and local municipal bodies. The state governments impose income tax on agricultural income, state excise duty, professional tax, land revenue and stamp duty.
As per GST Law, there are mainly six elements that determine supply of goods. They are supply of goods and / or services, supply is for a consideration, supply is made in the course or furtherance of business, supply is made in the taxable territory, supply is a taxable supply and Supply is made by a taxable person.
1. Time of Supply. Time of supply means the point in time when goods/services are considered supplied'. When the seller knows the 'time', it helps him identify due date for payment of taxes. CGST/SGST or IGST must be paid at the time of supply.
Schedule II to the CGST Act, 2017 lists a few activities which are to be treated as supply of goods or supply of services. For instance, any transfer of title in goods would be a supply of goods, whereas any transfer of right in goods without transfer of title would be considered as services.
Place of Supply is the location at where movement of goods terminates for delivery to the recipient. It is immaterial who moves the goods. Goods can be moved either by the Supplier or by the Recipient or by Any Other Person.
Under GST, the place of supply includes all forms of supply of goods and/or services. The categories include such as sale, transfer, barter, exchange or license. In addition, it also includes rental, lease or disposal made or agreed by a person in the course or furtherance of business.
