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Goods vs Services: Definition & Difference

What Are Goods?

What Are Services?

What Are the Differences Between Goods and Services?

The table below outlines the distinction between goods and services in a better way.

Particluars Goods Services
Tangibility Tangible; physical presence Intangible; cannot be touched or stored
Transferability Ownership can be transferred from the seller to the buyer Ownership is not transferred; only usage rights are provided
Production and Consumption Can be produced, stored, and consumed later Produced and consumed simultaneously
Perishable Not all manufactured goods are perishable Services are perishable
Inventory Can be inventoried and stored Cannot be stored; perishable in nature
Returnability Goods can typically be returned if unsatisfactory Services cannot be returned once rendered
Consistency Standardised production leads to uniformity Variability due to human involvement and customisation
GST Classification Subject to GST under the category of goods

GST Implications

Under the Goods and Services Tax (GST) regime in India, both goods and services are subject to taxation, but the rates and classifications differ:

  • Goods: Taxed based on their classification under the Harmonized System of Nomenclature (HSN). The GST Council periodically revises the tax rates for various goods. 
  • Services: Taxed based on their classification under the Service Accounting Code (SAC). The GST Council also revises service tax rates, aiming to simplify and rationalize the tax structure. 

 

Recent reforms have aimed at reducing the tax burden on essential goods and services, making them more affordable for consumers. 

While the basic distinction between goods and services revolves around tangibility and ownership, the GST framework introduces specific classifications that influence taxation and economic analysis. Understanding these distinctions is essential for navigating the complexities of the GST system and ensuring compliance with tax regulations.

FAQs About Goods vs Services