SCHEDULE – I (CGST ACT)

[See section 7]

ACTIVITIES TO BE TREATED AS SUPPLY EVEN IF MADE WITHOUT CONSIDERATION:

  1. Permanent transfer or disposal of business assets where input tax credit has been availed on such assets.

Sales of all business assets on which ITC availed without consideration are liable for GST under Para-1 then What about if ITC is not taken. If you are refer Para 4 of  Schedule -2 of section 7 of CGST Act “ (a) where goods forming part of the assets of a business are transferred or disposed of by or under the directions of the person carrying on the business so as no longer to form part of those assets, whether or not for a consideration, such transfer or disposal is a supply of goods by the person;”

It denotes that if Transfer of Business Assets on which ITC taken or not is called supply of Goods as per Para-4 of Schedule-II of the Section 7, and this supply of goods neither Exempt from GST nor any special notification for exclusion from supply in GST So it can be said that the word Business Assets is more important but for same words no any definition given in the Act.

This clause is wide enough to cover transfer of business assets from holding to subsidiary company for nil consideration

For Examples : P Ltd. donates old Desktop Computers to Charitable Schools when new laptops are purchased by business will qualify as supply provided input tax credit has been availed by P Ltd. on such laptops.

Business Assets Sold  With Consideration With/Without ITC GST Applicable Section-7
Business  Assets Sold  Without Consideration With ITC GST Applicable Para-1, Schedule-I Section-7
Business  Assets Sold without Consideration Without ITC It is Supply of Goods** Para-4, Schedule-I Section-7

** This Supply not excluded from GST and also not provided any exemption notification. (Land & Building – Excluded in Schedule –III of section-7)

** Still Confusion whether It is liable for GST levied or Not.

  1. Supply of goods or services or both between related persons or between distinct persons as specified in section 25, when made in the course or furtherance of business: ( For Services / Goods )

Provided that gifts not exceeding 50,000 rupees in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both.

  • Related Person Means as per Section 15 of act “For the purposes of this Act,–

Persons(person includes legal person )  shall be deemed to be “related persons” if––

 (i) Such persons are officers or directors of one another’s businesses;

(ii) Such persons are legally recognised partners in business;

(iii) Such persons are employer and employee;

(iv) Any person directly or indirectly owns, controls or holds 25% or more of the outstanding voting stock or shares of both of them;

(v) One of them directly or indirectly controls the other;

(vi) Both of them are directly or indirectly controlled by a third person;

(vii) Together they directly or indirectly control a third person; or they are members of the same family;

  • Distinct Person means other branch having same PAN
  • Employer and employee both related person as per definition so any gift given to them is liable to GST so Proviso provides that it exempt upto 50,000. But anything given in course of or on relation to his employment shall not b treated as business so GST is not applicable to such transaction.  
  • transactions between different locations (with separate GST registrations) of same legal entity(eg.,stock transfers or branch transfers) will  qualify  as  ‘supply’ under GST which is in contrast to the earlier regime.
  1. Supply of goods—

(a) by a principal to his agent where the agent undertakes to supply such goods on behalf of the principal; or

(b) by an agent to his principal where the agent undertakes to receive such goods on behalf of the principal.

* Transfer without Consideration = Supply

  1. Import of services by a taxable person from a related person or from any of his other establishments outside India, in the course or furtherance of business.( For Services )

Import of Services by any Person with/without Consideration in course of business or furtherance of business – Taxable as per Section -7(1)(b)

Import of Services By TAXABLE PERSON without Consideration in course of business for business or furtherance of business – Taxable as per Section – Para- 4 of Schedule –I.

For example : Mr.Y, a proprietor registered in Gujarat, has sought architect services from his brother located in US, with respect to his newly constructed house in Delhi. Although services have been received  by Mr.Y without consideration from a related person, yet it will not qualify as supply since the same has not been received in course or furtherance of business.

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Yogesh Parmar have vast knowledge in the field of Goods and Services Tax (GST). He is regularly conducting seminars on GST at various location for business personal to provide the knowledge about impact of GST on their business and how compliance should be made. He is founder of "www.etaxupdates.com" through which he is sharing his knowledge and latest amendments, circulars, notifications etc related to all type of taxes. He is also associated with some software development companies and providing advisory service and help to understand technical aspect of GST. He is also serving as functional manager as well as tester to those company which is developing software for GST.

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