Text
The text below is the section as served by the CBIC tax information portal on 17 September 2026, with the portal's own amendment footnote markers (shown as small numerals before a bracket) and its footnotes.[1] The Act as published in the Gazette of India is the legal source.
Section 7, verbatim (show)
* Section 7. Scope of supply.-
(1) For the purposes of this Act, the expression - "supply" includes-
(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business;
1[(aa) the activities or transactions, by a person, other than an individual, to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration.
Explanation .-For the purposes of this clause, it is hereby clarified that, notwithstanding anything contained in any other law for the time being in force or any judgment, decree or order of any Court, tribunal or authority, the person and its members or constituents shall be deemed to be two separate persons and the supply of activities or transactions inter se shall be deemed to take place from one such person to another;]
(b) import of services for a consideration whether or not in the course or furtherance of business; 2[and]
(c) the activities specified in Schedule I, made or agreed to be made without a consideration; 3[****]
(d) 4[****].
5[(1A) where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II.]
(2) Notwithstanding anything contained in sub-section (1),-
(a) activities or transactions specified in Schedule III; or (b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services.
(3) Subject to the provisions of 6[sub-sections (1), (1A) and (2)], the Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated as -
(a) a supply of goods and not as a supply of services; or (b) a supply of services and not as a supply of goods.
*Enforced w.e.f. 1st July 2017.
1. Inserted w.e.f. 01st July, 2017 by s. 108 of The Finance Act, 2021 (No. 13 of 2021) - Brought into force on 01st January, 2022 vide Notification No. 39/2021-C.T., dated 21st December, 2021.
2. Inserted w.e.f 01st July, 2017 by s. 3 of The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) - Brought into force on 01st February, 2019.
3. Omitted - "and" w.e.f 01st July, 2017 by s. 3 of The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) - Brought into force on 01st February, 2019.
4. Omitted "(d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II." w.e.f. 01st July, 2017 by s. 3 of The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) - Brought into force on 01st February, 2019.
5. Inserted w.e.f. 01st July, 2017 by s. 3 of The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) - Brought into force on 01st February, 2019.
6. Substituted for - "sub-sections (1) and (2)" w.e.f. 01st July, 2017 by s.3 of The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) - Brought into force on 01st February, 2019.
Sub-section (1)
7(1)(a)Consideration and business connection
all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of businessSection 7(1)(a)
The inclusion covers completed supplies and agreements to supply through the listed forms. Consideration, a person and the business connection are required together under this clause.
Questions to answer on the file4 questions
7(1)(aa) and ExplanationDealings with members
the person and its members or constituents shall be deemed to be two separate persons and the supply of activities or transactions inter se shall be deemed to take place from one such person to anotherSection 7(1)(aa) and Explanation
The clause covers dealings in either direction between a person other than an individual and its members or constituents for cash, deferred payment or other valuable consideration. Its Explanation overrides contrary laws and judgments. Both the separate-person treatment and the inter se supply are deemed.
Questions to answer on the file3 questions
7(1)(b)Imported services
import of services for a consideration whether or not in the course or furtherance of businessSection 7(1)(b)
Consideration remains part of this inclusion. The business connection required by clause (a) is expressly unnecessary for the imported services described here.
Questions to answer on the file2 questions
7(1)(c)Activities without consideration
the activities specified in Schedule I, made or agreed to be made without a considerationSection 7(1)(c)
Schedule I identifies the activities covered by this inclusion. The rule extends to activities made and those agreed to be made.
Questions to answer on the file2 questions
7(1A)Schedule II classification
where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II.Section 7(1A)
An activity must first constitute supply under sub-section (1). Schedule II then supplies its treatment as goods or services, with sub-section (2) retaining its overriding exclusions.
Questions to answer on the file2 questions
7(2)(a) and (b)Overriding exclusions
Notwithstanding anything contained in sub-section (1),- (a) activities or transactions specified in Schedule III; or (b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services.Section 7(2)(a) and (b)
Sub-section (2) overrides the inclusions in sub-section (1). Schedule III activities are neither goods nor services supplies. The same treatment covers notified activities of the Central Government, a State Government or a local authority acting as a public authority, on the Council's recommendations.
7(3)Notification classification power
Subject to the provisions of sub-sections (1), (1A) and (2), the Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated asSection 7(3)
The Government may specify transactions as goods rather than services, or services rather than goods. This power remains subject to the inclusions, Schedule II treatment and overriding exclusions in the named sub-sections.
Other questions to answer on the file
Questions a reviewer answers from the engagement file, grouped by the part of the section they come from. They describe what the section asks; they do not decide it.
Scope the section as a whole
Questions to answer on the file1 question
Activities that are neither goods nor services 7(2)
Questions to answer on the file2 questions
Frequently asked questions
Does an imported service need a business connection under clause (b)?
No. Import of services for consideration is included whether or not in the course or furtherance of business. Consideration remains required by that clause.
Section 7(1)(b)
Can an activity within Schedule III remain supply under sub-section (1)?
Sub-section (2) overrides sub-section (1) and treats Schedule III activities as neither goods nor services supplies. The exclusion governs the inclusion.
Section 7(2)(a)
How strong must an indirect business connection be?
The law does not settle the strength of connection required by the phrase "in the course or furtherance of business". Clause (a) requires that connection together with consideration and the other stated elements.
Section 7(1)(a)
Amendment history
The CBIC text carries 6 footnotes. The table gives each in the source's own terms. Effective dates are as the footnotes state them.[1]
| Note | Change |
|---|---|
| 1 | Inserted w.e.f. 01st July, 2017 by s. 108 of The Finance Act, 2021 (No. 13 of 2021) - Brought into force on 01st January, 2022 vide Notification No. 39/2021-C.T., dated 21st December, 2021.[2][3] |
| 2 | Inserted w.e.f 01st July, 2017 by s. 3 of The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) - Brought into force on 01st February, 2019.[4] |
| 3 | Omitted - "and" w.e.f 01st July, 2017 by s. 3 of The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) - Brought into force on 01st February, 2019.[4] |
| 4 | Omitted "(d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II." w.e.f. 01st July, 2017 by s. 3 of The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) - Brought into force on 01st February, 2019.[4] |
| 5 | Inserted w.e.f. 01st July, 2017 by s. 3 of The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) - Brought into force on 01st February, 2019.[4] |
| 6 | Substituted for - "sub-sections (1) and (2)" w.e.f. 01st July, 2017 by s.3 of The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) - Brought into force on 01st February, 2019.[4] |
Relationship with other provisions
| Provision | Connection | Words that tie them |
|---|---|---|
| Section 2 | this provision requires Section 2(31) | "for a consideration" takes its meaning from the definition of consideration |
| Section 2 | this provision requires Section 2(17) | "in the course or furtherance of business" takes its meaning from the definition of business |
| Schedule I | 7(1)(c) defined by Schedule I | 7(1)(c) "the activities specified in Schedule I, made or agreed to be made without a consideration" |
| Schedule II | 7(1A) defined by Schedule II | 7(1A) "shall be treated either as supply of goods or supply of services as referred to in Schedule II" |
| Schedule III | 7(2)(a) defined by Schedule III | 7(2)(a) "activities or transactions specified in Schedule III" |
| Section 9 | Section 9 requires this provision | tax is levied on supplies, so the charge depends on this section |
| Section 7 of the IGST Act, 2017, Section 8 of the IGST Act, 2017 | 7 supply meaning used by Section 7 of the IGST Act, 2017; Section 8 of the IGST Act, 2017 | IGST 7/8 "supply of goods"; "supply of services"; IGST 2(21) adopts CGST 7 |
Circulars and notifications
Circulars and notifications in the CBIC repository that cite this section, newest first, by number, date and subject. A listing here does not say what an instrument decides; read the instrument.
Circulars (12)
| Number | Date | Subject |
|---|---|---|
| Circular No. 243/37/2024-GST | 31 December 2024 | Clarification on various issues pertaining to GST treatment of vouchers |
| Circular No. 215/09/2024-GST | 26 June 2024 | Clarification on taxability of wreck and salvage values in motor insurance claims. |
| Circular No. 218/12/2024-GST | 26 June 2024 | Clarification regarding taxability of the transaction of providing loan by an overseas affiliate to its Indian affiliate or by a person to a related person. |
| Circular No. 204/16/2023-GST | 27 October 2023 | Clarification on issues pertaining to taxability of personal guarantee and corporate guarantee in GST |
| Circular No. 196/08/2023-GST | 17 July 2023 | Clarification on taxability of share capital held in subsidiary company by the parent company |
| Circular No. 171/03/2022-GST | 6 July 2022 | Clarification on various issues relating to applicability of demand and penalty provisions under the Central Goods and Services Tax Act, 2017 in respect of transactions involving fake invoices. |
| Circular No. 163/19/2021-GST | 6 October 2021 | Clarification regarding GST rates & classification (goods) based on the recommendations of the GST Council in its 45th meeting held on 17th September, 2021 at Lucknow-reg. |
| Circular No. 121/40/2019-GST | 11 October 2019 | Clarification related to supply of grant of alcoholic liquor license. |
| Circular No. 108/27/2019-GST | 18 July 2019 | which seeks to clarify issues regarding procedure to be followed in respect of goods sent / taken out of India for exhibition or on consignment basis for export promotion. |
| Circular No. 92/11/2019-GST | 7 March 2019 | Circular clarifying various doubts related to treatment of sales promotion scheme under GST |
| Circular No. 48/22/2018-GST | 14 June 2018 | Circulars clarifying miscellaneous issues related to SEZ and refund of unutilized ITC for job workers. |
| Circular No. 35/09/2018-GST | 5 March 2018 | Clarification regarding taxable services provided by the member of the Joint Venture(JV) to the JV and vice versa and inter se between the members of the JV. |
Notifications (12)
| Number | Date | Subject |
|---|---|---|
| Notification No. 23/2022-Central Tax | 23 November 2022 | Seeks to empower the Competition Commission of India to handle anti-profiteering cases under CGST Act, 2017 with effect from 01.12.2022. |
| Notification No. 25/2019-Central Tax (Rate) | 30 September 2019 | Seeks to notify the grant of alcoholic liquor licence neither a supply of goods nor a supply of service as per Section 7(2) of CGST Act, 2017. made under this section |
| Notification No. 24/2019-Integrated Tax (Rate) | 30 September 2019 | Seeks to notify the grant of alcoholic liquor licence neither a supply of goods nor a supply of service as per Section 20(i) of IGST Act read with Section 7(2) of CGST Act. made under this section |
| Notification No. 25/2019-Union Territory Tax (Rate) | 30 September 2019 | Seeks to notify the grant of alcoholic liquor licence neither a supply of goods nor a supply of service as per Section 21(i) of UTGST Act read with Section 7(2) of CGST Act, 2017. made under this section |
| Notification No. 16/2018-Central Tax (Rate) | 26 July 2018 | Seeks to amend notification No. 14/2017- Central Tax (Rate) to notify that services by way of any activity in relation to a function entrusted to a municipality under Article 243W shall be treated neither as a supply of good nor a service. made under this section |
| Notification No. 17/2018-Integrated Tax (Rate) | 26 July 2018 | Seeks to amend notification No. 11/2017- Integrated Tax (Rate) to notify that services by way of any activity in relation to a function entrusted to a municipality under Article 243W shall be treated neither as a supply of good nor a service. made under this section |
| Notification No. 16/2018-Union Territory Tax (Rate) | 26 July 2018 | Seeks to amend notification No. 14/2017- Union Territory Tax (Rate) to notify that services by way of any activity in relation to a function entrusted to a municipality under Article 243W shall be treated neither as a supply of good nor a service. made under this section |
| Annexure dated 28 Jun 2017 (Annexure to Notification No. 11/2017-Central Tax (Rate)) | 28 June 2017 | Annexure to Notification No. 11/2017-Central Tax (Rate) |
| Notification No. 11/2017-Central Tax (Rate) | 28 June 2017 | To notify the rates for supply of services under CGST Act amended by a later instrument |
| Notification No. 14/2017-Central Tax (Rate) | 28 June 2017 | To notify the supplies which shall be treated neither as a supply of goods nor a supply of service under the CGST Act amended by a later instrument made under this section |
| Notification No. 11/2017-Integrated Tax (Rate) | 28 June 2017 | To notify the supplies which shall be treated neither as a supply of goods nor a supply of service under the IGST Act amended by a later instrument made under this section |
| Notification No. 14/2017-Union Territory Tax (Rate) | 28 June 2017 | To notify the supplies which shall be treated neither as a supply of goods nor a supply of service under the UTGST Act amended by a later instrument made under this section |
Unsettled questions
The words of section 7 do not answer this question. Where one decides a matter on the file, the answer depends on the position taken on it.
- What makes an activity in the course or furtherance of business, where the link to the business is indirect? The Act defines business but not the strength of the connection this phrase requires.
See also
- Section 2 of the CGST Act, 2017: definitions
- Schedule I of the CGST Act, 2017: activities to be treated as supply even if made without consideration
- Schedule II of the CGST Act, 2017: activities or transactions to be treated as supply of goods or supply of services
- Schedule III of the CGST Act, 2017: activities which shall be treated neither as a supply of goods nor a supply of services
- Section 9 of the CGST Act, 2017: levy and collection
- Section 8 of the CGST Act, 2017: tax liability on composite and mixed supplies
References
- Central Board of Indirect Taxes and Customs. "Section 7. Scope of supply". Central Goods and Services Tax Act, 2017, CBIC tax information portal, with amendment footnotes 1 to 6. Retrieved 17 September 2026.
- The Finance Act, 2021. Cited in CBIC footnote 1.
- Notification No. 39/2021-Central Tax, dated 21 December 2021: Seeks to notify 01.01.2022 as the date on which provisions of section 108, 109 and 113 to 122 of the Finance Act, 2021 shall come into force. Cited in CBIC footnote 1.
- The Central Goods and Services Tax (Amendment) Act, 2018. Cited in CBIC footnotes 2, 3, 4, 5 and 6.
External links
- CGST Act, 2017, Section 7 on the CBIC tax information portal