CLAT PG Exam > CLAT PG Notes > Tax Law > Cheat Sheet: Supply under GST
Cheat Sheet: Supply under GST
1. Concept of Supply
1.1 Definition under Section 7
| Element | Description |
|---|---|
| Supply includes | All forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business |
| Import of services | Import of services for a consideration whether or not in the course or furtherance of business |
| Activities specified in Schedule I | Activities without consideration are deemed as supply |
| Activities specified in Schedule II | Determines whether particular transaction is supply of goods or services |
| Exclusions - Schedule III | Activities that are not treated as supply |
1.2 Essential Elements of Supply
- All forms of supply of goods or services or both
- Supply must be made for a consideration (except Schedule I activities)
- Supply must be made in the course or furtherance of business
- Supply must be made by a taxable person
- Supply must be a taxable supply
2. Composite and Mixed Supply
2.1 Composite Supply - Section 2(30)
| Aspect | Details |
|---|---|
| Definition | Supply of two or more taxable goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in ordinary course of business, one of which is a principal supply |
| Tax treatment | Taxed at the rate applicable to the principal supply |
| Principal supply | The predominant element to which other supplies are ancillary or incidental |
| Example | Supply of goods with transportation, insurance, installation - entire supply taxed as per goods rate |
| Aspect | Details |
|---|---|
| Definition | 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 |
| Tax treatment | Taxed at the highest rate of tax applicable to any of the supplies |
| Example | Gift pack containing canned foods, sweets, chocolates, cakes, dry fruits when supplied for a single price |
2.3 Key Distinctions
| Composite Supply | Mixed Supply |
|---|---|
| Naturally bundled supplies | Not naturally bundled |
| One is principal supply | No principal supply |
| Supplied in conjunction in ordinary course | Supplied for single price but not in ordinary course |
| Taxed at rate of principal supply | Taxed at highest rate |
3. Schedule I - Supply Without Consideration
3.1 Activities Deemed as Supply
| Activity | Conditions |
|---|---|
| Permanent transfer of business assets | Input tax credit has been availed on such assets |
| Supply between related persons or distinct persons | Made in course or furtherance of business |
| Supply by employer to employee | Where consideration is less than open market value; excludes supply by way of gift up to Rs. 50,000 per employee per year |
| Supply of goods by principal to agent | Agent undertakes to supply such goods on behalf of principal, or vice versa |
| Import of services by taxable person from related person or distinct person | Irrespective of whether in course or furtherance of business |
4. Schedule II - Goods or Services Classification
4.1 Activities Treated as Supply of Goods
- Transfer of title in goods - supply of goods
- Transfer of right in goods or undivided share in goods without transfer of title - supply of services
- Transfer of title in goods under agreement to sell - supply of goods at time when property in goods is transferred
- Land and building - supply of goods
- Transfer of right to use goods for any purpose (temporary or otherwise) - supply of services
4.2 Specific Transactions
| Transaction | Classification |
|---|---|
| Works contract including construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning | Supply of services |
| Transfer of business assets (sale/disposal) | Supply of goods |
| Rental, lease, licensing arrangements of immovable property | Supply of services |
| Construction of complex, building, civil structure, part thereof (including complex or building for sale before/after completion) | Supply of services |
| Temporary transfer or permitting use of IPR | Supply of services |
| Development, design, programming, customization, adaptation, upgradation, enhancement, implementation of IT software | Supply of services |
| Agreeing to obligation to refrain from an act, tolerate an act or situation, or do an act | Supply of services |
| Transfer of right to use goods | Supply of services |
5. Schedule III - Non-Supply Activities
5.1 Activities That Are Not Supply
| Activity | Details |
|---|---|
| Services by employee to employer | In the course of or in relation to employment |
| Services by court or tribunal | Functions of judicial nature |
| Services of funeral, burial, crematorium or mortuary | Including transportation of deceased |
| Sale of land | Except where specifically included as supply of services under Schedule II |
| Sale of building | Except where specifically included as supply of services under Schedule II |
| Actionable claims | Except lottery, betting and gambling |
| Supply of goods from place in non-taxable territory to another place in non-taxable territory without goods entering India | Goods neither enter nor leave India |
| Supply of warehoused goods to another person before clearance for home consumption | Goods remain in customs bonded warehouse |
| Gifts not exceeding Rs. 50,000 in value per person per year by employer to employee | Not considered as supply |
| Transactions in securities | Not supply under GST |
| Sale/mortgage/hypothecation of land | Not supply |
| Money/foreign exchange | Not supply |
6. Time of Supply
6.1 Time of Supply of Goods - Section 12
| Scenario | Time of Supply |
|---|---|
| Normal supply | Earliest of: (a) date of issue of invoice or last date on which invoice should be issued; (b) date of receipt of payment |
| Reverse charge mechanism | Earliest of: (a) date of receipt of goods; (b) date of payment; (c) date immediately following 30 days from date of issue of invoice |
| Vouchers | Date of issue of voucher if supply identifiable at that point, otherwise date of redemption |
| Residuary provision | Date of entry in books of account of recipient or date of debit in bank account, whichever is earlier |
6.2 Time of Supply of Services - Section 13
| Scenario | Time of Supply |
|---|---|
| Normal supply | Earliest of: (a) date of issue of invoice or date of receipt of payment, whichever is earlier; (b) date of provision of service if invoice not issued within prescribed time |
| Reverse charge mechanism | Earliest of: (a) date of payment; (b) 60th day from date of issue of invoice |
| Associated enterprises | Date of entry in books of account of recipient or date of payment, whichever is earlier |
| Banking/financial services | Date of entry in books of account of supplier or date of receipt of payment, whichever is earlier |
6.3 Change in Rate of Tax
- If tax rate changes between time of supply of goods/services and time of issue of invoice, time of supply determined in specified manner
- For goods: old rate applies if goods removed before rate change even if invoice issued later
- For services: rate at time of receipt of advance or invoice issuance governs
7. Place of Supply
7.1 Place of Supply of Goods - Section 10
| Type of Supply | Place of Supply |
|---|---|
| Goods supplied involving movement | Location of goods at time when movement terminates for delivery to recipient |
| Goods supplied not involving movement | Location of goods at time of delivery to recipient |
| Goods installed or assembled | Place of installation or assembly |
| Goods supplied on board conveyance | Location at which goods are taken on board |
7.2 Place of Supply of Services - Sections 12 & 13
7.2.1 Services to Registered Persons
- Place of supply is location of recipient of services on record
- Applies when recipient is registered person
7.2.2 Services to Unregistered Persons
| Type of Service | Place of Supply |
|---|---|
| Services directly in relation to immovable property | Location of immovable property |
| Restaurant and catering services, personal grooming, fitness | Location where services are actually performed |
| Services provided to individual requiring physical presence | Location where services are actually performed |
| Admission to events, amusement parks, cultural events | Place where event is actually held |
| Passenger transportation services | Place where passenger embarks on conveyance for continuous journey |
| Services on board conveyance | Location of first scheduled point of departure |
| Telecommunication services | Address of recipient on record with supplier |
| Banking/financial services | Location of recipient on record with supplier |
| Insurance services | Location of recipient on record with supplier |
| Advertisement to government, local authority, governmental authority | Location of recipient |
| Online information database access/retrieval services | Location of recipient |
| Residuary provision | Location of recipient if address available; otherwise location of supplier |
7.3 Special Cases
- Services supplied in respect of goods temporarily imported: location of recipient
- Services in respect of transportation of goods by vessel/aircraft: place of destination of goods
- Intermediary services: location where supplier is located
8. Valuation of Supply
8.1 Transaction Value - Section 15
| Component | Details |
|---|---|
| Transaction value | Price actually paid or payable when supplier and recipient are not related and price is sole consideration |
| Inclusions | Taxes, duties, charges (except GST); incidental expenses like commission, packing; interest/late fee/penalty for delayed payment; subsidies directly linked to price (except government subsidies); reimbursable expenses if part of supply |
| Exclusions | Discount given before or at time of supply if recorded in invoice; reimbursable expenses if not part of supply and recorded separately |
8.2 Valuation Rules (When Transaction Value Not Determinable)
| Rule | Method |
|---|---|
| Rule 27 | Open market value of contemporaneous supply to unrelated recipient |
| Rule 28 | Value of supply of goods/services of like kind and quality |
| Rule 29 | Value based on cost (110% of cost of production/manufacture or acquisition plus costs of provision) |
| Rule 30 | Reasonable means consistent with principles and general provisions of Section 15 and valuation rules |
8.3 Special Valuation Provisions
| Type | Valuation Method |
|---|---|
| Related/distinct persons | Open market value or Rule 28-30 if no open market value |
| Agents | Open market value or 90% of price charged by recipient when sold to unrelated person |
| Pure services through agents | Difference between amount charged by supplier and paid to service provider is commission |
| Residuary method | Best judgment basis applying principles of valuation |
8.4 Value in Case of Specific Supplies
- Money changer: buying/selling rate difference
- Air travel agent: commission without markup
- Life insurance: 10% of first year premium plus 25% of premium in subsequent years
- Second-hand goods: difference between selling price and purchase price (margin scheme)
- Works contract: gross amount including material value
9. Reverse Charge Mechanism (RCM)
9.1 Concept
| Aspect | Details |
|---|---|
| Definition | Liability to pay tax by recipient of goods/services instead of supplier under Section 9(3) and 9(4) |
| Section 9(3) | Government notifies specific categories of goods/services where recipient pays tax |
| Section 9(4) | Registered person receiving goods/services from unregistered person pays tax (subject to notification) |
9.2 Notified Categories Under RCM
- Supply of goods/services by unregistered supplier to registered recipient (under notified categories)
- Import of services from outside India
- Goods imported into India (IGST payable under RCM)
- Supply by goods transport agency (GTA) to registered recipient
- Services supplied by advocate/senior advocate to business entity
- Services of sponsorship
- Services of director to company
- Services of insurance agent
- Services of recovery agent to banking company/financial institution
- Services by arbitral tribunal to business entity
- Services by government/local authority (with exceptions)
- Renting of motor vehicle to casual taxable person
- Supply of lottery, betting, gambling, race club services
- Supply of security services by unregistered person to registered person
- Services of individual advocate by way of legal services to business entity located in taxable territory
9.3 Input Tax Credit Under RCM
- Recipient paying tax under RCM is entitled to claim ITC subject to conditions
- Payment must be made and reflected in returns
- Goods/services must be used in course or furtherance of business
10. Exemptions and Zero-Rated Supply
10.1 Exempt Supply
| Aspect | Details |
|---|---|
| Definition | Supply on which no GST is payable as per notification |
| ITC availability | No ITC available on inputs/input services used exclusively for exempt supply |
| Examples | Education services, healthcare services, agricultural produce, specified food items |
10.2 Zero-Rated Supply - Section 16
| Type | Details |
|---|---|
| Export of goods/services | Taxable at 0% with full ITC refund available |
| Supply to SEZ units/developers | Treated as zero-rated supply with ITC refund |
| Conditions | Must be exported out of India; payment must be received in convertible foreign exchange; other conditions as prescribed |
10.3 Nil-Rated Supply
- Supply where GST rate prescribed is 0%
- ITC on inputs used for nil-rated supply not available
- Different from zero-rated supply (which allows ITC refund)
10.4 Non-GST Supply
- Alcoholic liquor for human consumption (outside GST purview)
- Petroleum crude, motor spirit, natural gas, aviation turbine fuel, high speed diesel (till notified date)
- Electricity (not chargeable to GST)
11. Key Judicial Pronouncements
11.1 Composite vs Mixed Supply
- Safari Retreats case: Accommodation with food tested on predominant element principle
- Principal supply determination: preponderance test applied
- Natural bundling: supplies consumed together in normal circumstances
11.2 Supply Without Consideration
- Free samples with ITC availed: taxable supply
- Related person transactions: valuation at arm's length principle
11.3 Time and Place of Supply
- Continuous supply of services: time when invoice issued or payment received
- Import of services: recipient liable to pay tax on reverse charge basis
- Intermediary services: location of supplier determines place of supply
12. Important Definitions
| Term | Definition |
|---|---|
| Consideration (Sec 2(31)) | Any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for inducement of supply of goods or services, whether by recipient or any other person, excludes subsidy given by Central/State Government |
| Business (Sec 2(17)) | Includes trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not for pecuniary benefit; includes activities/transactions of nature incidental or ancillary to above |
| Related persons (Sec 15) | Persons are related if they are officers/directors of one another's businesses; legally recognized partners; employer and employee; person directly/indirectly owns controls or holds 25% or more of outstanding voting stock or shares; one of them controls the other |
| Distinct persons (Sec 25(4)) | Establishment of registered person in one state/UT treated as distinct from establishment in another state/UT or establishment in same state/UT under different registration |
| Open market value | Full value in money, excluding GST, payable by person unrelated to supplier where supplier and recipient are not related and price is sole consideration for supply, at same time when supply being valued is made |
| Principal supply | The supply which constitutes predominant element of composite supply and to which other supplies are ancillary |
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Apr 20, 2026 Last updated
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