Types of Supply Under GST in India: 2026 Guide

Use the current rule, not a familiar label

This guide preserves the useful questions in the supplied draft but corrects outdated provisions, over-broad claims and unsupported price or timeline promises. The legal result depends on current law, the documents, the transaction date and the reader's exact facts.

Official sources are linked at the end. Commercial service links are presented separately and do not replace primary law.

Step 1: does section 7 create a supply?

Supply includes forms such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed for consideration in the course or furtherance of business. Import of services for consideration can be supply even when not in business.

Schedule I identifies limited transactions treated as supply without consideration, including certain permanent transfer of business assets where ITC was availed, related/distinct-person supplies in business, principal-agent supplies and import of services from a related person or own establishment for business. A free item is not automatically a deemed supply.

Taxable, exempt, nil-rated and non-taxable

A taxable supply is one leviable to tax. 'Exempt supply' includes nil-rated supplies, wholly exempt supplies and non-taxable supplies. The classification matters because common-input ITC may require reversal or apportionment.

Do not infer a rate from a generic product label. Classification, description, HSN/SAC, notification conditions, recipient, use and date can change the result.

Zero-rated supply is not the same as exempt

Under section 16 of the IGST Act, exports and supplies for authorised operations to an SEZ developer or unit are zero-rated. Zero rating preserves access to ITC and refund mechanisms subject to current statutory conditions and procedure.

A domestic nil-rated or exempt supply does not become zero-rated merely because the invoice shows 0%. Evidence of export, place of supply, foreign-exchange conditions for services and SEZ endorsement may be critical.

Composite and mixed supplies

A composite supply consists of two or more taxable supplies naturally bundled and supplied together in the ordinary course, one being principal. Section 8 taxes it as the principal supply. The analysis is fact-based, not whatever the invoice calls it.

A mixed supply is two or more individual supplies sold together for one price that do not form a composite supply; it is taxed at the highest applicable rate. If items have separate prices, first test whether there is actually a mixed supply at all.

Inter-State, intra-State and distinct-person supplies

Place-of-supply rules under the IGST Act determine whether IGST or CGST plus SGST/UTGST applies. Supplier location and customer billing address alone do not answer every case, especially services, installations, immovable property, events and bill-to/ship-to arrangements.

Registrations of the same legal entity in different States are distinct persons. Stock or service transfers between them can be supplies even without external consideration and require valuation and documentation.

Input tax credit and invoicing consequences

Taxable and zero-rated supplies can support ITC subject to sections 16 and 17 and other conditions. Exempt supplies can trigger common-credit reversal. Gifts or free samples may trigger blocked credit under section 17(5)(h) even when the outward movement is not a taxable Schedule I supply.

Tax invoices, bills of supply, e-invoice reporting where applicable, export LUT/bond, debit and credit notes and return disclosure must follow the actual classification.

A seven-field classification record

For each recurring transaction record: parties and GSTINs; goods/services description and HSN/SAC; consideration; business purpose; related/distinct-person status; locations and place-of-supply rule; bundling and principal supply; exemption/rate notification; ITC position; and invoice type.

Review packages, subscriptions, reimbursements, discounts, samples and branch allocations because these create frequent errors.

Supply type: comparison that works on mobile

Common mistakes

• Calling all free samples deemed supplies
• Treating nil-rated and zero-rated as identical
• Using the highest rate for every product bundle
• Ignoring distinct-person branch transfers
• Applying an old rate without checking the current notification

When this guide does not decide the answer

A four-stage action plan

Define: record the parties, asset, transaction and intended outcome. Verify: test the current law and evidence. Approve: prepare the correct documents, controls and authority. Review: file through the proper channel and retain acknowledgements.