{"id":15477,"date":"2020-08-28T14:49:24","date_gmt":"2020-08-28T09:19:24","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=15477"},"modified":"2021-01-15T12:23:14","modified_gmt":"2021-01-15T06:53:14","slug":"transactions-treated-as-supply-under-gst","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/transactions-treated-as-supply-under-gst\/","title":{"rendered":"Transactions Treated as Supply under GST"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Transactions among related persons and other activities of the\n\u2018GST Schedule I\u2019 will be treated as Supply even if made without consideration. GST\nwill apply to the transaction. These are registered in the Schedule I of the\nCGST Act.<\/p>\n\n\n\n<p>The businesses are conducted generally between parties that are associated or between any agent and a principal. The party pay <a href=\"https:\/\/corpbiz.io\/gst-registration\"><strong>GST<\/strong><\/a> and can later claim it as an input tax credit.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/transactions-treated-as-supply-under-gst\/#Supply_Under_GST\" >Supply Under GST<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/transactions-treated-as-supply-under-gst\/#Concept_of_Supply_of_Goods_and_Services_Before_GST\" >Concept of Supply of Goods and Services Before GST<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/transactions-treated-as-supply-under-gst\/#Transactions_between_Related_Persons\" >Transactions between Related Persons<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/transactions-treated-as-supply-under-gst\/#Related_Person_for_Goods_Supply_under_GST\" >Related Person for Goods Supply under GST<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/transactions-treated-as-supply-under-gst\/#What_is_the_taxability_of_Supply_under_GST_made_between_related_persons\" >What is the taxability of Supply under GST made between\nrelated persons?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/transactions-treated-as-supply-under-gst\/#Valuation_of_transactions_between_related_persons\" >Valuation of transactions between related persons<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/transactions-treated-as-supply-under-gst\/#Taxable_Person_Importing_Services_from_any_Related_Person\" >Taxable Person Importing Services from any Related Person<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/corpbiz.io\/learning\/transactions-treated-as-supply-under-gst\/#Permanent_transfer_of_goods_where_Input_Tax_Credit_has_been_utilized\" >Permanent transfer of goods where Input Tax Credit has\nbeen utilized&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/corpbiz.io\/learning\/transactions-treated-as-supply-under-gst\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Supply_Under_GST\"><\/span>Supply Under GST<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Supply under GST is considered as a&nbsp;taxable event for charging of tax.&nbsp;The liability to pay tax rises at the \u2018time of supply of goods and services\u2019.&nbsp;Therefore, determining whether or not a transaction falls under the meaning of supply, is important to decide GST\u2019s applicability.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Concept_of_Supply_of_Goods_and_Services_Before_GST\"><\/span>Concept of Supply of Goods and Services Before GST<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Under the previous Indirect Tax Regime, there was no idea of the Supply of goods and services. The phase at which indirect tax are levied are wide-ranging under different laws. The \u2018excise duty\u2019 charged on goods produced when they are taken out of the workshop. \u2018Service Tax\u2019 were levied based on rules known as the \u2018point of taxation\u2019 rules, for services reduced. <\/p>\n\n\n\n<p>A VAT arise on the value of the sale of goods and provision of services. The current systemmerged all taxes to maintain a single taxable event known as GST.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/apply-for-gst-registration-certificate-online\/\">How to apply for GST registration certificate online?<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Transactions_between_Related_Persons\"><\/span>Transactions between Related Persons<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Transactions between related parties are of particular\nimportance under any law as the pricing practices and arriving at them are interesting.\nWhen parties are linked, the prices are precise, and they will not sometimes be\nthe price that would have then been charged, if the transaction has taken place\nbetween two unrelated parties.<\/p>\n\n\n\n<p>Let\u2019s now understand how to treat transactions between related personswhensuch a supply&nbsp;under GST will be taxable, and how it is calculated under the GST laws. Associated persons are defined under Section 2(84) of the <strong><em>GST Act<\/em><\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Goods_and_Services_Tax_(India)\"><strong><em>[1]<\/em><\/strong><\/a><\/sup>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Related_Person_for_Goods_Supply_under_GST\"><\/span>Related Person for Goods Supply under GST<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"652\" height=\"505\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/08\/image-118.png\" alt=\"Related Person for Goods Supply under GST\" class=\"wp-image-15478\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/08\/image-118.png 652w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/08\/image-118-300x232.png 300w\" sizes=\"(max-width: 652px) 100vw, 652px\" \/><\/figure><\/div>\n\n\n\n<p>Persons can be a legal person who can be\nindividuals, HUF, company, firm, LLP, co-operative society,body of individuals,\nlocal authority, government,&nbsp; or any\nartificial juridical person. It can also includesbusinesses incorporated\noutside India. Persons that are associated with another\u2019s business or are any\nsole agent or sole distributor or sole concessionaire should also be deemed to\nbe related person.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_taxability_of_Supply_under_GST_made_between_related_persons\"><\/span>What is the taxability of Supply under GST made between\nrelated persons?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Supplies between the related persons with consideration should be treated as \u2018Supply\u2019 like any other transaction of the goods and services. While, the Supply made between any related persons for insufficient or no Consideration is covered by <strong><em>Schedule I of the GST Act<\/em><\/strong>. Such businesses shall be treated as \u2018Supply\u2019 only if it happens in the course or continuance of business activities.<\/p>\n\n\n\n<p>Additionally, when any entity makes an import of service from a related person or establishment outside India without any consideration but for the persistence of business, it will be considered as supply under GST.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Valuation_of_transactions_between_related_persons\"><\/span>Valuation of transactions between related persons<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>Value of Supply&nbsp;between any related persons other than where the supply is made through an agent is determined as below-<\/em><\/strong><\/p>\n\n\n\n<ul><li>The open market value of such Supply- Open market value is the value of the Supply between two unrelated entities. When Supply is between two related entities, there is a high possibility that their relationship will influence the prices.<\/li><li>If the open market value cannot be decided, then the number of goods of the same kind and quality shall be considered for valuation.<\/li><li>If both the above methods do not give any appropriate value then the value based on&nbsp;cost&nbsp;or total cost of production or under the&nbsp;residual process will be considered.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Taxable_Person_Importing_Services_from_any_Related_Person\"><\/span>Taxable Person Importing Services from any Related Person<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Transaction related to Import of services by any\ntaxable person from any related person or any of the other corporation outside\nIndia for business purposes will be treated as Supply.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Permanent_transfer_of_goods_where_Input_Tax_Credit_has_been_utilized\"><\/span>Permanent transfer of goods where Input Tax Credit has\nbeen utilized&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Permanent transfer or sale of\nbusiness of goods on which input tax credit has been avail can also be treated\nas Supply even if there is no consideration received. GST applies to the sale\nof business assets only. It does not apply to the acquisition of personal land\nor building and any other personal asset.<\/p>\n\n\n\n<p>\u201cPermanent transfer\u201d indicates\ntransfer without any intention of receiving the goods and services back. Goods\nsent on job work or products sent for testing or certification will not qualify\nas Supply as there is no permanent transfer of goods and services.<\/p>\n\n\n\n<p>Donation of business assets or scrapping or distribution in any other manner other than as a sale \u2013 i.e., for consideration will qualify as \u2018supply,\u2019 where input tax credit has been claimed.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>This blogs deals with transactions between related persons and other such activities that are treated as Supply under GST even if it is made without any consideration. Supply under GST is considered as a\u00a0taxable event for charging of tax.\u00a0The liability to pay tax rises at the \u2018time of supply of goods and services\u2019.\u00a0Therefore, determining whether or not a transaction falls under the meaning of supply, is important to decide GST\u2019s applicability. Consult with <a href=\"https:\/\/corpbiz.io\/\"><strong>CorpBiz\u2019s<\/strong><\/a> expert if you want to avail any services concerning <a href=\"https:\/\/corpbiz.io\/gst-registration\"><\/a>GST Registration with ease.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/what-do-you-mean-by-tcs-under-gst\/\">What do you mean by TCS under GST?<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Transactions among related persons and other activities of the \u2018GST Schedule I\u2019 will be treated as Supply even if made without consideration. GST will apply to the transaction. These are registered in the Schedule I of the CGST Act. The businesses are conducted generally between parties that are associated or between any agent and a [&hellip;]<\/p>\n","protected":false},"author":18,"featured_media":15503,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[16],"tags":[930],"acf":{"service_id":"96"},"authorName":"Sakshi Srivastava","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/03\/IMG-20180130-WA0007.jpg","authorDescription":"Sakshi has pursued B.B.A.LL.B.(IPR Hons.). She is an avid reader and is keen to gather and share her knowledge on the subjects relating to IPR, Company Law and GST. Priorly she has worked as a legal researcher and vide her articles she aims at improving the core knowledge of the subjects to the masses.","postViews":7559,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/15477"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/18"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=15477"}],"version-history":[{"count":6,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/15477\/revisions"}],"predecessor-version":[{"id":24216,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/15477\/revisions\/24216"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/15503"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=15477"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=15477"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=15477"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}