Topics In Demand
Notification
New

No notification found.

Blog
Taxability of inter-unit supplies

June 2, 2017

GST

504

0

 In this blog, we look at a query on supplies between units of the same entity.

 

Query:

We have two trading units for IT goods (one in Karnataka, one in Maharashtra) and another unit for ITeS (in Karnataka). Will supplies from the trading units to the ITeS unit and vice-versa be taxable?

 

Response:

Under GST, while all units within the same State would be reckoned as one taxable person for the purposes of GST, every branch or a unit would be deemed to be a distinct person, if they are located in different States (or Union Territories). However, at the option of the taxable person, even different units within the same State can be registered as separate taxable persons, if they are different business verticals.

Accordingly, the IT Unit (trading) and ITeS Unit (services) in Karnataka will prima facie be one taxable person and the IT Unit (trading) in Maharashtra will be another taxable person for the purposes of GST, even though this unit is also covered within the same PAN (under Income Tax) as that of the Karnataka units.

 

Given that the Karnataka Units together and the Maharashtra Unit will be treated as separate taxable persons, any supplies between units in the two States will also qualify as ‘supply of goods or services’, as relevant, and will be liable to GST – even though such supplies may be without any consideration. However, supplies between the ITeS Unit and the IT Unit in Karnataka will not be taxable supplies.

Legislative reference: Schedule I of the CGST ACt, 2017 read with Section 7 & 8 of the IGST Act, 2017

Authors: Meghana Belawadi and NR Badrinath

 

 

 With GST set to be implemented, www.withdia.com brings to you collaborative wisdom on the GST law and potential impact areas for your business. To read more such curated content or to give us your valuable feedback head to our webpage www.withdia.com, or download our Android/iOS app on your phone and have all this knowledge accessible on the go!


That the contents of third-party articles/blogs published here on the website, and the interpretation of all information in the article/blogs such as data, maps, numbers, opinions etc. displayed in the article/blogs and views or the opinions expressed within the content are solely of the author's; and do not reflect the opinions and beliefs of NASSCOM or its affiliates in any manner. NASSCOM does not take any liability w.r.t. content in any manner and will not be liable in any manner whatsoever for any kind of liability arising out of any act, error or omission. The contents of third-party article/blogs published, are provided solely as convenience; and the presence of these articles/blogs should not, under any circumstances, be considered as an endorsement of the contents by NASSCOM in any manner; and if you chose to access these articles/blogs , you do so at your own risk.


© Copyright nasscom. All Rights Reserved.