GST Impact on Supply without Consideration & Importation of Services

In our earlier blog Supply of Goods and Services: What does it Mean we discussed about supply with consideration which is mostly about business operational activities like sales, transfers, and so on.

In this blog post, we will discuss exceptional scenarios, which form a part of supply, and are taxable:

• Supplies made without consideration
• Supplies made for a consideration, whether or not in the course or for furtherance of business

Supply without consideration

Scenarios where you cannot Avail Input Tax Credit

In our previous blog we learned about the conditions for availing GST input tax credit and the scenarios in which input tax credit (ITC) can be availed. In this blog, we will discuss the scenarios where you cannot avail Input Tax Credit.

1. Registration not applied for within 30 days from the date on which you become liable to register

If you have not applied for registration within 30 days from the date on which you become liable to register, you will lose the eligible ITC on inputs and inputs contained in semi-finished or finished goods in stock, on the day before the date on which you become liable to pay tax.

Is GST on Track? What we can Infer from the Budget Speech

Our Finance Minister, Mr. Arun Jaitley, in his Budget Speech, did not elaborately discuss the road map of GST. However, he did indicate that the passage of the Constitutional amendment bill for GST and progress of its implementation is a “Tectonic Policy Initiative”.

While briefing the house on the benefits of GST, he said, “the advantages of GST for our economy in terms of spurring growth, competitiveness, indirect tax simplification and greater transparency have already been extensively discussed in both houses of Parliament. I thank all members of both the Houses for having passed the Constitution Amendment unanimously”. He also thanked the State Governments for resolving all relevant issues in the GST Council. This is a clear indication from the Finance Minister that major hurdles to GST implantation are cleared from the GST Council.

Supply of Goods and Services: What does it Mean?

Under the current indirect tax structure, the taxable event differs for each type of tax. The taxable events under the current indirect tax structure are captured below:

Type of Tax	Taxable Event
Central Excise	Removal of excisable goods
VAT	On sale of goods
Service Tax	Provision of taxable services

The taxable event under GST is the Supply of Goods and/Services. All taxes such as Central Excise, Service Tax and VAT/CST will be subsumed under GST, and the concept of manufacture of goods, sale of goods, and provision of services would no longer be relevant.

Thus, for every business, it is crucial to understand the relevance of supply which sets the scope of transactions liable for the levy of GST.

Relevance of Supply under GST