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Activities Classified as Goods or Services under GST

Prakash Matre
Prakash Matre at March 20, 2023

Classification of Goods and Services under GST

As per the Schedule II of the GST, some activities are classified as goods or service to avoid confusion.

List of activities specified as Goods or Services

Here is the list of activities that are specified as goods or services under GST:

Heading Particulars To be treated as
1. Transfer (i) Transfer of the title of the goods   Shall be treated as goods
(ii) Transfer of right or share in goods without transferring the title Shall be treated as service
(iii) Transfer of title in goods under an agreement stating that goods will pass at a future date after paying full consideration. Shall be treated as goods
2. Land and Building (i) Lease, rent, tenancy, easement, license to occupy land Shall be treated as service
(ii) Lease or letting out any building for business or commercial purposes. (Building can be commercial, industrial or residential) Shall be treated as service
3. Treatment or process Any treatment or process applied to another person’s good (For instance job worker processing goods) Shall be treated as service
4. Transfer of business assets (i) Business assets transferred or disposed of by the owner irrespective of consideration Shall be treated as goods
(ii) The owner using business assets for personal purpose Shall be treated as service
(iii) If the taxpayer ceases to be a taxable person then assets will be assumed to be supplied by him in the course of business before he ceases to be a taxable person. However, this rule will not be applicable when the business is transferred to another person or the business is carried out by a personal representative who is a taxable person Shall be treated as goods
5. Renting of immovable property Renting out any immovable property except residential property as it is exempted under GST Shall be treated as service
6. Construction of a building intended for sale Any construction of a building including complex that is intended for sale to the buyer, wholly or partially. Shall be treated as service
7. Temporary transfer or permitting the use of intellectual property right Shall be treated as service
8. Development of information  and technology software Shall be treated as service
9. Agreeing to refrain from an act (Non-competition agreements) or to do any act or to tolerate an act Shall be treated as service
10. Transfer of the rights to use any goods (whether for a specified period or not) for any purpose  for a consideration Shall be treated as service
11. Supply of goods by any incorporated Association of Person (AOP) or Body of Individual (BOI) to a member for consideration or deferred payment Shall be treated as goods
12. Composite Supply (i) Works Contract Shall be treated as service
(ii) Supply of services related to food or drinks in-lieu of consideration not including alcohol for human consumption Shall be treated as service

It shall be noted that the work contract under GST is treated as a supply of services even though it is a composite supply consisting of both goods (cement, bricks, etc) and services (engineers, architect, labor, etc).


The Bottom Line

Clear classification of activities as goods or services under GST has not only helped in removing the complexities but has also reduced the compliance procedure.

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GST Verification API
GST Verification API integrates with your application to validate GST taxpayer details.

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