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Schedule II of the CGST Act


October 29, 2020

Schedule II Of The CGST Act

Schedule II of the CGST Act

What is GST? What is GST classification? And which are the GST items list? -These questions lead us to the end module of GST which is the Classification of goods and services under GST.

What is the classification of goods and services under GST?

It has two schedules- Schedule I and Schedule II.

Schedule I,  you can read here

Classification of Goods and Services under GST under Schedule II of the CGST Act

It specifically illustrates the activities to be treated as a supply of goods or supply of services, it provides that any treatment or process which is applied to another person’s goods is a supply of services.

Activities or transactions that need to be treated as supply of goods or supply of services include:

Transfer of Goods

Specifics Treated as
Transfer of the title in goods Goods
Transfer of the right or share in goods without the transfer of title Services
Transfer of title in goods under an agreement that property Goods
Transfer in goods that will pass a future date on full payment  Goods

Land & Building

Specifics Treated as
Lease, tenancy, easement, license to occupy land Services
Lease or letting of any building for commercial purposes Services

Treatment or Process

Specifics Treated as
Any treatment or process applied to another person’s goods Services

Transfer of Business Assets

Specifics  Treated as

Where any person ceases to be a taxable person, any goods forming part of the business properties of any business carried out by him shall be considered to be supplied by him in course of or furtherance of his business immediately before he ceases to be a taxable person except:

  • when business is transferred to another person
  • When business is done by a representative who is considered to be a taxable person
Goods
Renting of immovable property  Services
Construction of a building, complex, civil structure or a part thereof including a building or complex intended for sale to a buyer partially or wholly.  Services
Temporary transfer or permitting the use of any intellectual property right Services
Development of information technology software Services
Consenting to refrain from an act. i.e. Non-competition agreement or tolerate an act or do an act. Services
Pass the rights to use any goods for any purpose irrespective of the duration for a consideration.  Services

Composite Supply

Specifics Treated as
Works Contract Services
Supply by service of food and drinks in lieu of consideration, other than alcohol Services
Supply of goods by any unincorporated AOP or BOP for consideration Goods

Works contracts were treated as both goods and supply in the pre-GST regime, to which both VAT and service tax were applied. Work contractors had to deal with various rates, composition schemes, etc. that lead to intricacies.

These uncertainties associated with the works contract tax structures have been simplified under GST. Activities vividly sectioned as goods or services under the GST structure will help to eradicate ambiguities and bring down legal actions.

 

 

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