In the current article we will discuss about activities to be treated as supply even if made without consideration under Goods & Services Tax (GST).
As per section 7 of CGST ACT 2017, supply includes the activities specified in “Schedule-I”, made or agreed to be made without consideration. So here we will discuss about all those schedule-I activities . Schedule-I has prescribed 4 activities as follows:-
Where business assets are transferred permanently and input tax credit has already been availed then that would be considered as supply and GST has to be paid accordingly. However entry no 1 of Schedule-I is applicable only in case where business asset is disposed of after availing input tax credit, if not input tax credit has been availed on such business asset then there would not be any GST payable on such disposal.
Provided that “Gift” not exceeding 50,000 rupees in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both.
Let us understand about related person that is given as per explanation to sec 15 of CGST Act.
Persons shall be deemed to be “related persons” if––
The term “person” also includes legal persons and persons who are associated in the business of one another in that one is the sole agent or sole distributor.
Now let us understand the meaning of agent and principal. As per section 2(88) “Principal” means a person on whose behalf an agent carries on the business of supply or receipt of goods or services or both. As per 2(5) of CGST Act “Agent” means a person including a factor, broker, commission agent, arhatia, del-credre agent, an auctioneer or any other mercantile agent by whatever name called who carries on supply or receipt of goods or services or both on behalf of another.
Let us understand with an example A ltd USA is the holding company of B ltd, India. B ltd imports business consultancy services from A ltd in the course or furtherance of business then the aforesaid importation of service shall fall within the ambit of term “Supply” and B ltd shall be liable to pay IGST.
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