Different types of supply under GST

Different types of supply under GST

What do we denote by Supply?

GST introduced “different types of supply” with various rules attached to it. Supplies refer to the good and services that are offered or received in an industry. It is treated as a taxable affair under the new GST system. However, previously, supply was treated in a different manner and this taxable matter had different rules along with a separate regulation. According to Section 66B of Finance Act, 1994, a duty at the rate of 14% must be imposed on the value of all services except those services specified in the negative record. In case of the manufacturing of goods, the central excise duty is imposed. On the other hand, GST is imposed on the supply of goods. Supply is explained in Section 7 of the Act in the following way:

Categories of Supply

1. The entire distribution of goods or services along with selling, transmission, exchange, authorization, leasing, removal that is agreed upon by an individual may be to enlarge his or her business.
2. Services that are imported may be in order to expand the business.

Depending on the combination, supply can be categorized into:-

Composite Supply Composite supply refers to a supply that comprises of two or more goods and / or services, as per as Section 2(30). Among all these supplies, one is considered to be the major supply. In the course of business, the good or services which are supplied cannot be supplied individually. Under the modified GST system, goods are packaged and transported with assurance. The primary element in a composite supply is referred as the principal supply, where all other supplies of goods and other services are considered supplementary.

Continuous Supply Continuous supply can be further classified into-A continuous supply of goods refers to the businesses where goods are supplied continuously and frequently as mentioned in a contract. This supply may be carried by means of a wire, pipeline, and cable or through any other medium. Moreover, the supplier sends a statement to the receiver of the goods on a regular basis. A continuous supply of services refers services that will be provided or received uninterrupted as stated under a given contract. This supply will be provided for an interval of three months and more. The payment will be done periodically.

Mixed supply Mixed supply refers to the supply of two or more goods or/and services by a taxable person for a fixed price. These products may be supplied independently and are not reliant on one another. However, in case these items are supplied separately, it cannot be referred as a mixed supply anymore. GST system treats a mixed supply as the supply of items with the highest rate of duty levied on those items.

1. Continuous supply of goods
2. Continuous supply of services.

Furthermore, depending on the type of recipient, there are different types of supply.

Inward Supply As per as Section 2(67), Inward Supply refers to receiving goods and/or services by means of purchase, attainment or by any other means, which however may or may not be taken into consideration.

Outward supply Outward supply as explained in Section 2(83) refers to the supply of goods and services by means of transaction transmit, barter, approval, letting or disposal, including other modes. This supply is to be made by an individual may or may not to expand the business. When supply is classified on the basis of tax treatment, then there are different types of supply such as-

Standard-rated supplies Goods and services subject to a tax at a standard rate under GST are called Standard-rated supplies. An individual registered under GST acquires tax on the above supply. Moreover, he is eligible to claim input tax credit achieved on these levied supplies.

Exempt supplies Exempt supplies refer to those supplies of goods or services on which GST is not applicable. Businesses cannot collect any GST on these goods and no credit can be claimed the credit on the business inputs. ​​

Taxable supply Under Section 2(108), taxable supply can be described as providing goods or/and services on which tax is imposed.

Non taxable supply Nontaxable supply refers to the supply of goods and services or either of them, where items are duty-free and no tax is imposed under any Acts.

There are several rules of supply under GST based on location. These are:-

Inter-State supply When goods or services or both are supplied from one state to another, it is referred as interstate supply. Under the GST Act interstate supply explained as:Furthermore, goods supplied to territories of India are also classified as interstate supply till they cross the customs frontiers of India. In addition, supply to Special Economic Zone unit along with Special Economic Zone developer is also specified as interstate supply. Intra-State supply As per as the Section 8 in the IGST Act, 2017 , intra-State supply refers to

1. when the setting of the supplier and the location of the customer, where the goods and services provided are in two different States
2. when the setting of the supplier and the location of the customer ,where the goods and services provided are in two different Union territories
3. When the setting of the supplier and the location of the customer, where the goods and services provided are in State and a Union territory.

Different types of supply of goods to a location where the place of supply of goods and the setting of the supplier are in the same State or same Union territory. Such goods are not treated as intra-State supply, where-

Territorial waters When the setting of the supplier is in the territorial waters or the location where the supply is made is in the territorial water. Thereby, the location of the supply will be in the nearest Coastal Union Territory or State. Thus, it is important to have a thorough understanding of “different types of supply” to understand the rules and regulations introduced by the new GST system. GST is a new tax system introduced in India, and it is important to study this tax regime in detail before starting any new venture.

1. The goods supplied to or by a Special Economic Zone developer or a Special Economic Zone Unit.
2. Where goods that are imported into the territory of India till they cross the customs border and are supplied to a tourist as mentioned in Section 15.