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What is the Concept Of Supply Under GST and the Types

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Created on
May 9, 2023


What’s Inside

The Indian government introduced the Goods and Services Tax Act, 2017 and the concept of supply under GST to deal with the multifaceted indirect tax policies. The goal of the new tax regime was to eliminate the cascading effect of taxes on interstate goods supply.

The GST Act defines the supply of goods as the agreement-based transfer of ownership of goods between two parties. Because GST is a destination-based tax, goods are taxed at the point of delivery rather than the point of origin, the place of supply or the goods supplied under GST is an integral part of the taxation system.

Meaning Of Supply Under GST

The concept of supply of goods and services is self-explanatory in economics and is measured as the net value of production in a certain time period. However, under GST, supply is defined as a taxable event that may include the following:

  • Exchange of services and goods for or against money.
  • Transfer of ownership or sale of services and goods.
  • Licensing involves monthly payments to exercise particular privileges or use the property of the owner.

Supply is mainly a tool for advancing company ventures or making charity contributions. Importing services and goods for corporate or personal use is also included in the definition of supply.

What Are The Different Types Of Supply?

The GST definition of supply distinguishes between taxable and non-taxable supplies. Further classifications are as below:

1. Non-Taxable Supplies

These services and goods are not subject to taxes. These are some examples:

  1. Non-GST Supplies - Non-taxable supplies under GST include the supply of certain goods and services.
  2. Exempt Supplies - Certain services and goods are exempt from GST payment even if they fall under the taxable category.

2.Taxable Supplies

All services and goods that are taxable under GST are included in this category. Taxpayers can, however, demand refunds on tax payments made throughout the payment period. Taxable supplies are further categorised into two categories:

  1. GST Zero-Rated Supply - Certain supplies sent to Special Economic Zones (SEZs) or other business organisations are tax-free, but are charged when sold within national borders.
  2. Regular Taxable Supplies - A supply of any good or service is considered regular if it results in a tax liability.

Wrapping Up

The CGST Act effectively includes the delivery of any services or goods that are taxable at the destination rather than the point of origin under GST. Unlike the pre-GST regime, which treated all taxable events separately, the GST regime is more uniform and simplifies the taxes procedure.

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Frequently Asked Questions

1. What Is The Scope Of Supply Under the CGST Act?

Supply is a taxable event to charge GST. Tax liability occurs at the 'time of supply of goods or services'. Thus, evaluating whether or not a transaction falls under the concept of supply is critical in determining GST applicability.

2. What Is The Meaning Of Scope Of Supply?

A taxable person has to provide a GST-eligible supply. As a result, a supply between two non-taxable individuals does not constitute a supply under GST. A "taxable person" is an individual who has registered or is required to register under section 22 or section 24.


Fi Money is not a bank; it offers banking services through licensed partners and investment services through epiFi Wealth Pvt. Ltd. and its partners. This post is for information only and is not professional financial advice.
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