Types of Supply under GST Act
Supply under GST can be classified in several ways depending on the direction of the transaction, continuity, taxability, geographical location and whether multiple goods or services are supplied together. These classifications are mainly derived from the Central Goods and Services Tax Act, 2017 and the Integrated Goods and Services Tax Act, 2017.
1. Classification Based on Movement or Flow
2. Classification Based on Continuity
One-Time or Occasional Supply
A supply that occurs as a single transaction may be described commercially as a one-time supply. This expression is not separately defined in the CGST Act and should therefore not be confused with a statutory definition.
Continuous Supply of Goods - Section 2(32)
Continuous supply of goods means a supply of goods provided, or agreed to be provided, continuously or on a recurrent basis under a contract, whether or not through wire, cable, pipeline or other conduit, where the supplier invoices the recipient on a regular or periodic basis. The definition also permits notified supplies to be included subject to prescribed conditions.
Continuous Supply of Services - Section 2(33)
Continuous supply of services means a supply of services provided, or agreed to be provided, continuously or on a recurrent basis under a contract for a period exceeding three months with periodic payment obligations. Notified services may also be included subject to prescribed conditions.
3. Classification Based on Taxability
| Type | Statutory basis | Meaning |
|---|---|---|
| Taxable Supply | Section 2(108), CGST Act | A supply of goods or services or both which is leviable to tax under the CGST Act. |
| Non-Taxable Supply | Section 2(78), CGST Act | A supply of goods or services or both which is not leviable to tax under the CGST Act or the IGST Act. |
| Exempt Supply | Section 2(47), CGST Act | A supply attracting a nil rate or wholly exempt under section 11 of the CGST Act or section 6 of the IGST Act; it also includes non-taxable supply. |
| Zero-Rated Supply | Section 16, IGST Act | Export of goods or services or both, or supply of goods or services or both for authorised operations to an SEZ developer or SEZ unit. |
Zero-Rated Supply and Input Tax Credit
Zero-rated supply is different from an ordinary exempt supply. Section 16 of the IGST Act permits input tax credit for making zero-rated supplies subject to the statutory conditions, notwithstanding that such supply may otherwise be exempt. Supplies to an SEZ qualify for zero-rating only when made for authorised operations.
The general refund route under the current section 16 framework is supply under bond or Letter of Undertaking without payment of integrated tax and claim of refund of unutilised input tax credit, subject to the Act, rules and notified exceptions. Certain classes of persons or supplies may be permitted to use the payment-of-IGST-and-refund route where specifically notified.
4. Classification Based on Geographical Location
Inter-State Supply - Section 7 of the IGST Act
Subject to the place-of-supply provisions, a supply is generally inter-State where the location of the supplier and the place of supply are in:
- two different States;
- two different Union territories; or
- a State and a Union territory.
Section 7 also treats specified other transactions as inter-State supplies, including imported goods until they cross the customs frontiers of India, import of services, supplies where the supplier is in India and the place of supply is outside India, supplies to or by an SEZ developer or SEZ unit, and other taxable-territory supplies that are not intra-State and are not otherwise covered.
Intra-State Supply - Section 8 of the IGST Act
Subject to the applicable place-of-supply provisions, supply of goods or services is generally intra-State when the location of the supplier and the place of supply are in the same State or the same Union territory. Supplies to or by an SEZ developer or SEZ unit are excluded from intra-State treatment.
Supplies in Territorial Waters - Section 9 of the IGST Act
Where the location of the supplier or the place of supply is in territorial waters, section 9 deems the relevant location to be in the coastal State or Union territory where the nearest point of the appropriate baseline is located.
5. Supplies of Goods or Services Made Together
Composite Supply - Section 2(30)
A composite supply is a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination of them, which are naturally bundled and supplied together in the ordinary course of business, one of which is the principal supply.
Under section 8(a) of the CGST Act, a composite supply is treated as a supply of the principal supply. Section 2(90) defines principal supply as the predominant element of a composite supply to which the other supply or supplies are ancillary.
Mixed Supply - Section 2(74)
A mixed supply consists of two or more individual supplies of goods or services, or any combination of them, made together by a taxable person for a single price where the combination does not constitute a composite supply.
Under section 8(b), a mixed supply is treated as the particular supply in the bundle that attracts the highest rate of tax.
| Feature | Composite Supply | Mixed Supply |
|---|---|---|
| Bundling | Naturally bundled in ordinary course of business | Not naturally bundled as a composite supply |
| Principal supply | Yes | No statutory principal supply for the bundle |
| Pricing | Can depend on facts and contractual arrangement | Definition specifically requires a single price |
| Tax treatment | Treated as the principal supply | Treated as the supply attracting the highest tax rate |