What is Supply under GST? - Section 7 explained
Updated: Feb 7
GST is payable when an event of supply occurs as per GST Act. Thus, it is important to know the nature of trade or transaction and whether such transaction is a supply in the light of the scope of supply.
Prior to GST, the indirect taxation in the form of Service Tax or VAT or any such other tax was levied on supply but there was no concept of the scope of supply. So, the tax was levied at different stages in the different acts. For instance, Service Tax had a concept of Point of Taxation, according to which service tax liability was determined. A value of Goods or Services was considered for the levy of VAT. Scope of supply has been defined in GST Act under Section 7.
Scope of Supply under GST: Section 7
As per Sub Section (1), if a person is providing or involved in any of the following activities
sale (transfer of ownership of goods)
transfer (transfer of goods/right in goods without the transfer of the title)
exchange (to swap or transfer for an equivalent using money e.g. exchange of old tv against new TV)
barter (exchange of commodity without money)
license (permission granted to exercise certain privileges)
rental (payment at agreed intervals for using else's property)
lease (right to use for a certain period without transfer of title)
disposal (business goods or property disposed of without consideration e.g. old assets donated)
- course of business or furtherance of business
- for consideration,
is considered as supply under GST. Thus if any of this is not met it is not considered a sale.
e.g. If Mr. ABC has purchased a Computer for personal use and he sold it after a few months to a dealer, This is not considered as supply under CGST as this is not done by Mr. ABC for the furtherance of business, however, if MR. ABC had purchased a laptop for business use and later on disposes of it by donating it to the orphanage, it would constitute a supply under GST.
However, Schedule I of the GST Act considers certain transactions as supply even if no consideration is involved.