In India, Goods and Services Tax (GST) applies to both goods and services, but there are key differences in how GST is applied to each. Here’s a breakdown of the differences: 1. Definition of Goods and Services: Goods: According to the GST Act, goods are every kind of movable property. This includes tangible items like clothes, electronics, food, machinery, and more. Goods can also include things like seeds, minerals, or gas. Services: Services are defined as anything that is not classified as goods. Services are intangible and refer to activities or benefits provided, such as consultancy, banking services, transportation, construction, hotel accommodations, etc. 2. GST Rate Structure: Goods: Goods are classified under different tax slabs, and the rate of GST varies depending on the type of goods. Common slabs are: 5%: For essential items like foodgrains, medicines, etc. 12%, 18%, and 28%: For other goods such as electronics, clothing, and luxury items. Zero-rated: Some goods are exempt or taxed at 0%, like agricultural produce. Services: Services are also classified under different tax rates, but they generally follow a separate rate structure: 18%: This is the most common rate for services such as restaurant services, banking services, and transportation. 5%: Applied to specific services like transportation of goods by road or hotel accommodation (below a certain tariff). 28%: Some luxury services like cinema tickets, air travel (business class), etc. 3. Exemptions: Goods: Certain goods are exempt from GST, such as unprocessed food, medicines, and agricultural products. Services: Some services, like educational services, healthcare, and government services, are also exempt from GST. 4. Input Tax Credit (ITC): Goods: Input tax credit (ITC) can generally be claimed for goods purchased, which can be used to offset the output GST liability. However, certain goods like motor vehicles or personal consumption goods do not qualify for ITC. Services: ITC can also be claimed for services, provided the service is used for business purposes. However, some services, such as food and beverages, entertainment, or personal services, may not be eligible for ITC. 5. Place of Supply Rules: Goods: The place of supply for goods is usually the location where the goods are delivered or received, depending on the nature of the transaction (e.g., interstate or intrastate). Services: The place of supply for services may depend on the location of the service provider or the location of the recipient. For example, telecommunication services are taxed based on the location of the recipient. 6. Exports and Imports: Goods: Exports of goods are zero-rated, meaning no GST is applied, but the exporter can claim the refund of the tax paid on inputs. Imports of goods attract IGST (Integrated Goods and Services Tax), which is levied at the applicable rate. Services: Exports of services are also zero-rated. Import of services (when the service provider is outside India) is subject to IGST at the applicable rate. 7. Returns and Compliance: Goods: The GST compliance for goods involves reporting sales and purchases, including input and output taxes for goods in tax returns like GSTR-1 and GSTR-3B. Services: The compliance for services is similar, but service providers must ensure they correctly classify their services under the appropriate HSN/SAC (Harmonized System of Nomenclature / Service Accounting Code) codes in GST returns. 8. Taxable Event: Goods: The taxable event for goods is the supply of goods, which occurs when goods are sold, transferred, or made available for use. Services: The taxable event for services is the supply of services, which occurs when a service is rendered or performed. Summary of Differences: GST Rate: Different GST rates are applied to goods and services based on their classification. Taxable Event: The taxable event for goods is the supply of goods, and for services, it is the provision of services. Exemptions: Both goods and services have exemptions, but the categories differ. ITC: Input tax credit can be claimed for both, but some goods and services may be excluded from ITC. Place of Supply: The place of supply for goods and services may differ based on the type of transaction and nature of supply. In essence, while both goods and services are subject to GST, they are governed by distinct provisions, rate structures, and rules for exemptions and compliance.

Under GST (Goods and Services Tax), the application to goods and services differs primarily in terms of classification, valuation, and the point of taxation. Key Differences: 1. Definition and Classification: Goods refer to tangible items that are movable and can be sold, transferred, or exchanged. Services are intangible in nature and include activities such as consultancy, repairs, or digital services. 2. HSN Code vs. SAC Code: Goods are classified under Harmonized System of Nomenclature (HSN) codes, while services use Service Accounting Codes (SAC) for identification. 3. Valuation: The value of goods is generally determined based on the transaction value, including any additional charges like freight. For services, valuation may include other components like time-based rates, continuous supply, or variable pricing mechanisms. 4. Point of Taxation: Goods are taxed at the time of supply, which is typically the transfer of possession or ownership. Services are taxed based on the provision or completion of the service, or as specified in contractual agreements. 5. Reverse Charge Mechanism: Certain goods like agricultural produce attract reverse charge on a limited basis, while services under specific categories (e.g., legal services) more commonly fall under reverse charge obligations. 6. GST Rates: The GST rates for goods vary widely based on categories like essentials, luxury items, or exempted goods. Service rates are more standardized but may vary for certain special categories (e.g., education, healthcare). These differences ensure the uniform application of GST principles while addressing the unique characteristics of goods and services.