Types of Supply Under GST: Definitions, Rules, Examples & Updates (2025)
The concept of “supply” is the cornerstone of India’s Goods and Services Tax (GST) regime. Understanding the types of supply under GST is critical for every business, tax professional, and law student. In this article, we’ll break down each type with reference to Sections, Rules, Schedules, and Notifications, including updates for 2025.
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🧾 Introduction to Supply Under GST
The term “supply” is the taxable event under GST. Any taxable supply of goods or services or both attracts GST—whether it's sale, transfer, barter, lease, or even disposal.
📘 Definition of Supply – Section 7 of CGST Act
According to Section 7 of the CGST Act, 2017, supply includes:
- Sale, transfer, barter, exchange, license, rental, lease, or disposal
- Made or agreed to be made for a consideration
- In the course or furtherance of business
Also includes:
- Import of services (whether or not for business)
- Activities listed in Schedule I (even without consideration)
Excluded activities are listed under Schedule III.
📚 Major Types of Supply Under GST
1. ✅ Taxable Supply
Defined under Section 2(108). These are supplies that attract GST at rates specified by the GST Council.
Examples:
- Sale of mobile phones (18%)
- Rent from commercial property (18%)
Tax applied:
- CGST + SGST for intra-state
- IGST for inter-state
2. ❌ Exempt Supply
Defined under Section 2(47) and Section 11 of CGST Act.
These include:
- Supplies attracting nil rate
- Wholly exempt via notification
- Non-taxable supplies
Examples:
- Agricultural produce
- Education services
- Healthcare services
No input tax credit (ITC) can be claimed on exempt supplies.
3. 🌍 Zero-Rated Supply
Defined under Section 16 of the IGST Act. These include:
- Export of goods/services
- Supplies to SEZ developer or SEZ unit
Zero-rated = 0% tax but full ITC is allowed + refund of unutilized credit.
4. 🚫 Non-GST Supply
These are goods/services that fall outside GST purview.
Examples:
- Petroleum crude
- Alcohol for human consumption
- Electricity
Not taxed under GST; often regulated under other laws.
🤝 Supplies Made Without Consideration – Schedule I
Even if no money is exchanged, certain activities are still considered supply.
Schedule I Includes:
- Permanent transfer of business assets where ITC was claimed
- Supply between related persons or distinct persons
- Gifts to employees above ₹50,000
- Principal to agent & vice versa
📌 Section Reference: Section 7(1)(c) + Schedule I of CGST Act
🛑 Excluded Activities – Schedule III
These activities are neither supply of goods nor services.
Schedule III Includes:
- Services by employee to employer in the course of employment
- Court/Tribunal services
- Sale of land & building (subject to conditions)
- Funeral services
- Actionable claims (excluding lottery, betting)
These are completely outside the scope of GST.
🧩 Composite Supply vs. Mixed Supply
Composite Supply – Section 2(30) + Section 8
Naturally bundled supplies. Tax rate = Principal supply.
Example:
- Hotel stay + breakfast + Wi-Fi → Entire package taxed as per lodging rate
Update:
📢 Notification 08/2024-CT (Rate) clarified construction-related location charges are part of composite supply.
Mixed Supply – Section 2(74)
Not naturally bundled. Tax rate = Highest taxed item.
Example:
- Gift box: chocolate (18%) + pen (12%) → Taxed at 18%
🧭 Inter-State vs. Intra-State Supply
Inter-State Supply – IGST Act Section 7
- Supplier and recipient are in different States/UTs
- IGST is applicable
Examples:
- Delhi to Maharashtra: IGST applies
- Imports from the US: IGST under reverse charge
Intra-State Supply – IGST Act Section 8
- Supplier and recipient are in same State/UT
- CGST + SGST are applicable
Example:
- Chennai to Chennai supply: 9% CGST + 9% SGST
🌐 Import & Export as Supplies
Import of Services – CGST Section 7(1)(b)
- Supplier outside India
- Recipient in India
- Place of supply = India
- IGST under reverse charge mechanism
Export of Goods/Services – IGST Section 16
- Zero-rated
- Refund of ITC available
📢 Latest Updates and Notifications (2024–2025)
🔹 Notification No. 08/2024-CT(Rate) – Dated 08.10.2024
Clarified that preferential location charges for under-construction flats form part of composite supply.
🔹 Section 8 of CGST Act – Updated July 2024
Clarified tax treatment of composite/mixed supply with practical illustrations.
🔹 GST Council – 55th Meeting (Dec 2024)
- Refined rules for determining place of supply
- Clarified ITC restrictions on exempt + composite use
📌 Conclusion
Understanding types of supply under GST helps in accurate tax calculation, input credit eligibility, and GST compliance. Each type—taxable, exempt, zero-rated, or deemed—has different implications under the CGST and IGST Acts. Keep updated with GST Council clarifications and CBIC notifications to ensure you’re always compliant.
Read More: Section 31 of CGST Act Rule 46 – Detailed Explanation, Amendments & Practical Scenarios