Understanding the Scope of Supply in Business Operations
Supply encompasses various transactions such as sale, transfer, importation of services, and more, whether for consideration or without it. The content outlines activities treated as supply of goods/services and excludes items on the negative list. Detailed schedules provide insight into activities treated as supply and the treatment of business assets, intellectual property, and more.
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WHAT IS SUPPLY? Supply includes- (a) Sale, Transfer, Barter, Exchange, License, Rental , Lease, Disposal etc. for consideration in course or furtherance of business. (b) Importation of services for consideration whether or not in course or furtherance of business (c) Supply without consideration (Section 7(1) (c ) + Schedule 1) - Activities / Transactions to be treated as supply of goods or supply of services (Schedule 2) - Excludes Negative list of supply (Schedule 3)
SCHEDULE- 1-ACTIVITIES TO BE TREATED AS SUPPLY EVEN IF MADE WITHOUT CONSIDERATION Permanent transfer or disposal of business assets where input tax credit has been availed on such assets. Supply of goods or services or both between related persons or between distinct persons when made in the course or furtherance of business. Supply of goods (a) By a principal to his agent where the agent undertakes to supply such goods on behalf of the principal. (b) By an agent to his principal where the agent undertakes to receive such goods on behalf of the principal. Import of services by a person from a related person or from whom any of his other establishments outside India , in the course or furtherance of business.
SCHEDULE- I1-ACTIVITIES OR TRANSACTIONS TO BE TREATED AS SUPPLY OF GOODS OR SERVICES Sr. No. 1 Heading Transfer Activities Any transfer of title in goods Any transfer of rights in goods without the transfer of title Transfer of title under forward contract Goods or Services? Supply of goods Supply of services Supply of goods 2 Land and Building Any lease, tenancy , easement, license to occupy land Any lease or letting out of building Job Work Supply of services Supply of services Supply of services 3 Treatment of Process
SCHEDULE- I1-ACTIVITIES OR TRANSACTIONS TO BE TREATED AS SUPPLY OF GOODS OR SERVICES Sr. No. 4 Heading Transfer of Business Assets Activities Transfer or disposal of goods forming part of the assets of business Business goods put to non business use Treatment of business goods when a person ceases to be a taxable person Renting of immovable property Construction of a complex Temporary transfer or permitting the use or enjoyment of any intellectual property right Goods or Services? Supply of goods Supply of services Supply of goods 5 Supply of services Supply of services Supply of services Supply of services
SCHEDULE- I1-ACTIVITIES OR TRANSACTIONS TO BE TREATED AS SUPPLY OF GOODS OR SERVICES Sr. No. Heading Activities Development , design , programming , customization, adaptation, upgradation, enhancement, implementation of information technology software Agreeing to the obligation to refrain from an act or a situation or to do an act Transfer of the right to use any goods for any purpose (whether or not for a specified period ) for cash, deferred payment or other valuable consideration. Goods or Services? Supply of services Supply of services Supply of services
SCHEDULE- I1-ACTIVITIES OR TRANSACTIONS TO BE TREATED AS SUPPLY OF GOODS OR SERVICES Sr. No. 6 Heading Composite Supply Activities Works Contract Restaurant service for cash /deferred payment or other valuable consideration By any unincorporated association or body of persons to a member thereof for cash , deferred payment or other valuable consideration. Goods or Services? Supply of services Supply of services 7 Supply of goods Supply of goods
SCHEDULE- I1I- SUPPLY OF NEITHER GOODS NOR SERVICES Services by an employee to the employer in the course or in relation to his employment. Services by any 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 Panchayat , Members of Municipalities etc. Services of funeral , burial , crematorium or mortuary including transportation of the deceased. Sale of land and sale of building Actionable claims other than lottery , betting and gambling.
SCHEDULE- I1I- SUPPLY OF NEITHER GOODS NOR SERVICES Supply of goods from a place in the non taxable territory to another place in the non taxable territory without such goods entering into India. (a) Supply of warehoused goods to any person before clearance for home consumption. (b) Supply of goods by the consignee to any other person, by endorsement of documents of title to the goods after the goods have been dispatched from the port of origin located outside India but before clearance for home consumption.
COMPOSITE AND MIXED SUPPLIES Composite Supply Consists of two or more taxable supplies. Consists of two or more individual Mixed Supply supplies. Not naturally bundled , only supplied together. Naturally bundled in conjunction with each other one of which is principal supply. Prices may be charged separately. Trade practice is to bundle such activities. No such trade practice. Taxed at the rate of principal supply. A single price is charged. Taxed at rate applicable to the supply with the highest rate of tax. Example: A gift pack comprising of chocolates and sweets. Example: Charger supplied alongwith mobile phones
