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GOODS AND SERVICES TAX (GST)

IMPORTANT DEFINITIONS (WITH BARE PROVISIONS)

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(a) BUSINESS

Section 2(17) of the Central Goods and Services Tax Act, 2017

Bare Provision (Simplified)

“Business” includes any trade, commerce, manufacture, profession, vocation, adventure, or similar activity, whether or not it is for profit.
It also includes any activity incidental or ancillary to such activity and activities of clubs or associations providing services to members.

Explanation in Easy Language

Business under GST is very wide. It covers almost every economic activity, even if there is no intention to earn profit.

Example

A shop selling clothes is a business.
A person giving coaching classes is also a business.
A club charging membership fees is also treated as business.

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(b) CAPITAL GOODS

Section 2(19) of the Central Goods and Services Tax Act, 2017

Bare Provision (Simplified)

“Capital goods” means goods, the value of which is capitalised in the books of account of the person claiming input tax credit and which are used or intended to be used in the course or furtherance of business.

Explanation in Easy Language

Capital goods are long-term assets used in business, not for resale, and recorded in accounts.

Example

Machinery in a factory
Computers in office
Furniture in shop

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(c) EXPORT AND IMPORT OF GOODS AND SERVICES

Export of Goods

Section 2(5) of the Integrated Goods and Services Tax Act, 2017

Bare Provision (Simplified)

“Export of goods” means taking goods out of India to a place outside India.

Example

Sending goods from India to another country like USA or UK.

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Export of Services

Section 2(6) of the Integrated Goods and Services Tax Act, 2017

Bare Provision (Simplified)

“Export of services” means supply of any service when
supplier is in India
recipient is outside India
place of supply is outside India
payment is received in convertible foreign exchange
supplier and recipient are not merely establishments of the same person

Example

An Indian company providing IT services to a foreign client.

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Import of Services

Section 2(11) of the Integrated Goods and Services Tax Act, 2017

Bare Provision (Simplified)

“Import of services” means supply of any service where
supplier is located outside India
recipient is located in India
place of supply is in India

Example

Taking consultancy services from a foreign company.

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Import of Goods

Import of goods is not defined in CGST Act but understood as bringing goods into India from outside India and is governed by Customs law.

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(d) GOODS

Section 2(52) of the Central Goods and Services Tax Act, 2017

Bare Provision (Simplified)

“Goods” means every kind of movable property other than money and securities, but includes actionable claims, growing crops, grass and things attached to land which are agreed to be severed before supply.

Explanation in Easy Language

Goods are physical items that can be moved and sold.

Example

Mobile phone, car, books, furniture, crops

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(e) SERVICES

Section 2(102) of the Central Goods and Services Tax Act, 2017

Bare Provision (Simplified)

“Services” means anything other than goods, money and securities but includes activities relating to the use of money or its conversion for which a separate consideration is charged.

Explanation in Easy Language

Services are intangible activities provided for consideration.

Example

Teaching, banking, insurance, legal advice, online services

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CONCLUSION

These definitions are clearly provided in the GST Acts and are very important for understanding how GST is applied. In exams, it is always better to write the section number, then explain the bare provision in simple language, and give examples.

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