To determine tax rate for a given good or service, it is necessary to undertake classification of goods and services.
This is because classification helps in identifying the slab rates under which such goods and services fall.
Therefore, to determine the rate of tax applicable, it is necessary for a taxable person to identify his supply as a good or a service.
Furthermore, upon identifying the same, the taxable person needs to further determine the type of supply. That is whether the supply is a composite supply or mixed supply.
For instance, if the supply is composite supply, the taxable person first needs to determine the principal supply in such case. The principal supply will further help in determining the classification and rate of GST applicable.
Once this is done, classification in terms of HSN needs to be undertaken by the taxable person in order to determine the applicable GST rate.
But to determine the tax liability under GST, one needs to check for not only the goods or services that are chargeable to tax. He or she also needs to look into the goods or services that are exempt from tax.
Thus, the taxpayers need to understand not only the provisions regarding exemptions but also their implication to avoid its wrong application. So, before jumping to the list of GST exempted services, let’s first define what is an exempt supply under GST?
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