Sunday, March 12, 2017

gst goods service consideration and money meaning


Goods u/s 2(49)

> Goods:
  • “goods’’ means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply; 

> Different from the meaning provided under the Sale of Goods Act and VAT Laws:
  • “goods” means every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale;

> Actionable claims (included)
> Securities (excluded)

Service u/s 2(92)

> Service:

“services’’ means anything other than goods;
  • Explanation 1.- Services include transactions in money but does not include money and securities;
  • Explanation 2.- Services does not include transaction in money other than an activity relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged.


> Transaction in money: Money Exchange, Payment wallets etc.

> Immovable Property?

Consideration u/s 2(28)

> Consideration
“consideration” in relation to the supply of goods or services includes

  • (a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government;
  • (b) the monetary value of any act or forbearance, whether or not voluntary, in respect of, in response to, or for the inducement of, the supply of goods or services, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government: 

PROVIDED that a deposit, whether refundable or not, given in respect of the supply of goods or services shall not be considered as payment made for the supply unless the supplier applies the deposit as consideration for the supply;

> Important phrases:
  • “In respect of” - with reference to, or in connection with
  • “In response to” - a reply or a reaction
  • “for the inducement of” - an act or thing that is intended to persuade someone or something

> “whether in money or otherwise” – Money includes all form of payments –Thus, “otherwise” relates to non- monetary consideration like Barter, Exchange etc.

> Consideration by other person may or may not be on behalf of the recipient–but should have link with the supplies – ecommerce model

> “the monetary value of any act or forbearance”
  • Cases like relinquishment of rights or claims, reciprocal promise etc.
  • Why not benchmark value of goods or services?

Money u/s 2(65)
  • “money” means Indian legal tender or any foreign currency, cheque, promissory note, bill of exchange, letter of credit, draft, pay order, traveller cheque, money order, postal or electronic remittance or any other instrument recognized by the Reserve Bank of India when used as consideration to settle an obligation or exchange with Indian legal tender of another denomination but shall not include any currency that is held for its numismatic value;
  • Foreign currency was not treated as money under the Service Tax law – 65B(33)
  • Old currency notes kept for their historic importance are excluded from the definition



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