October 29, 2020
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.
It has two schedules- Schedule I and Schedule II.
Schedule I, you can read here
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:
| 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 |
| Specifics | Treated as |
| Lease, tenancy, easement, license to occupy land | Services |
| Lease or letting of any building for commercial purposes | Services |
| Specifics | Treated as |
| Any treatment or process applied to another person’s goods | Services |
| 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:
|
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 |
| 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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