Activities to be treated as Neither Supply of Goods Nor a Supple of Service, Composite Supplies & Mixed Supplies, Intra-State and Inter-State Supply

Transcription

1 1 Activities to be treated as Neither Supply of Goods Nor a Supple of Service, Composite Supplies & Mixed Supplies, Intra-State and Inter-State Supply

2 2 Activities to be treated as Neither Supply of Goods Nor a Supple of Service

3 Provisions under the Third Schedule (III) to the CGST Act 2017 regarding Activities/ Transactions which shall not be treated as Supply of Goods or Services, are as under: 3 1. Services by an employee to the employer in the course of or in relation to his employment. 2. Services by any court or Tribunal established under any law for the time being in force. 3. (a) the functions performed by the Members of Parliament, Members of State Legislature, Members of Panchayats, Members of Municipalities and Members of other local authorities; (b) the duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity; or (c) 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. Indirect Taxes Committee, ICAI

4 Provisions under the Third Schedule (III) to the CGST Act 2017 regarding Activities/ Transactions which shall not be treated as Supply of Goods or Services, are as under: 4 4. Services of funeral, burial, crematorium or mortuary including transportation of the deceased. 5. Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building. 6. Actionable claims, other than lottery, betting and gambling. Explanation: For the purposes of paragraph 2, the term court includes District Court, High Court and Supreme Court. Indirect Taxes Committee, ICAI

5 5 Composite Supplies & Mixed Supplies

6 Composite Supplies (Sec 2 (30)) 6 composite supply means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply; Illustration. Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply; Indirect Taxes Committee, ICAI

7 Mixed Supplies (Sec 2 (74)) 7 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. Illustration. A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drinks and fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately and is not dependent on any other. It shall not be a mixed supply if these items are supplied separately; Indirect Taxes Committee, ICAI

8 8 Principles Determining Supply as inter-state or intra-state

9 Principles to determine a supply as an inter- State Supply 9 Determination of supply of goods and/ or services as Inter-State supply Ø CRITICAL factors: Where the below 2 are in DIFFERENT STATES a) Location of the supplier and b) Place of supply determined u/s 7,8, 9 or 10 of IGST Act Ø)Specific INCLUSIONS: Supply of goods in the course of import, till they cross the customs frontiers of India Supply of services in the course of import Supply when place of supply is outside India but supplier is in India Supply to or by a SEZ developer or an SEZ unit Residuary supply: Any supply in the taxable territory and which is not an intra-state supply (E.g.: Supply of goods from within a Union Territory ( UT ) without Legislature) Indirect Taxes Committee, ICAI

10 GST on Goods Intra-State Supply Inter-State Supply CGST-SGST From location To location To location IGST Dual tax CGST-SGST Registered office not relevant; location of goods is relevant Intra-State supply, if from and to in one State One tax IGST (higher rate) Movement for delivery relevant; even stocktransfer taxable Imports basic customs + IGST

11 GST on Services Intra-State Supply Inter-State Supply Supplier s address of GST registration CGST-SGST Place of usage of service Place of usage of service or recipient s address of GST registration IGST Dual tax CGST-SGST Place of usage relevant Test of such place listed for various services One tax IGST (higher rate) Imports receiver to pay IGST When place of usage not fixed, use recipient s address

12 Principles to determine a supply as an intra- State Supply 12 Determination of supply of goods and/ or services as Intra-State supply Ø CRITICAL factors: Where the below 2 are in the SAME STATE a) Location of the supplier and b) Place of supply determined u/s 7,8, 9 or 10 of IGST Act Ø)Specific EXCLUSIONS: Supplies to or by a SEZ developer/ SEZ unit; Importation of goods till they cross the customs frontiers of India.

13 Illustrations 13 Supply Supplier Place of Supply Result Goods Karnataka Tamil Nadu Inter-State (IGST) Services Pondicherry Kerala Inter-State (IGST) Goods Chandigarh* Chandigarh* Inter-State (IGST) Services Chandigarh* Punjab Inter-State (IGST) Goods Punjab Chandigarh* Inter-State (IGST) Goods Delhi Delhi Intra-State (CGST/SGST) Services Rajasthan Rajasthan Intra-State (CGST/SGST) Note: Chandigarh is a UT without Legislature; Explanation to Section 2(2) provides that the term State includes a UT with Legislature (Of the 7 UTs, Delhi and Pondicherry are the only 2 UTs with Legislature). In case of a Union Territory if it adopts the legislature of a particular State say Punjab, then it will be intra-state supply.

14 Thank You 14