Section 2 – Definitions

- February 04, 2026

Section 2 of CGST Act, 2017 – Definitions

Updated on: February 2026
Prepared by: Yours Tax Consultant

1. Bare Act Overview – Section 2

Section 2 of the CGST Act, 2017 contains definitions of key terms used throughout the Act and the CGST Rules.

Unless the context otherwise requires, the meanings assigned under Section 2 apply to the entire CGST law.

2. Importance of Section 2

Section 2 is one of the most important provisions of the CGST Act because:

Every charging, procedural and penal section depends on defined terms
Wrong interpretation of definitions leads to disputes and litigation
Courts heavily rely on Section 2 while deciding GST cases

If a word is defined in Section 2, that definition must be applied strictly, unless the context demands otherwise.

3. Important Definitions under Section 2 (Selected)

(a) “Business” – Section 2(17)

The term business includes any trade, commerce, manufacture, profession, vocation, adventure or wager, whether or not carried out for profit.

This definition is very wide and covers even incidental or ancillary activities.

(b) “Goods” – Section 2(52)

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

Money and securities are specifically excluded.

(c) “Services” – Section 2(102)

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.

This definition ensures that all supplies are either goods or services.

(d) “Supply” – Section 2(108)

Supply shall have the same meaning as assigned to it in Section 7 of the CGST Act.

This makes Section 7 the controlling provision for levy of GST.

(e) “Input Tax” – Section 2(62)

Input tax means the central tax, State tax, integrated tax or Union territory tax charged on supply of goods or services or both to a registered person.

Input tax does not include tax paid under the composition scheme.

(f) “Input Tax Credit” – Section 2(63)

Input tax credit (ITC) means the credit of input tax.

Eligibility, conditions and restrictions of ITC are governed by Section 16 to 21.

(g) “Registered Person” – Section 2(94)

Registered person means a person who is registered under Section 25 of the CGST Act, but does not include a person having a Unique Identity Number (UIN).

(h) “Taxable Person” – Section 2(107)

Taxable person means a person who is registered or liable to be registered under Section 22 or 24.

4. Interpretation Rule – “Unless the Context Otherwise Requires”

Section 2 starts with the phrase:

“In this Act, unless the context otherwise requires…”

This means:

Definitions apply generally
But context may override literal meaning in exceptional cases

Courts use this principle to avoid absurd or impractical interpretations.

5. Use of Definitions in Litigation

Many GST disputes revolve around interpretation of definitions, such as:

Whether an activity qualifies as “business”
Whether a transaction is goods or services
Eligibility of ITC based on definition of input tax

Therefore, a strong understanding of Section 2 is essential for replies, appeals and writ petitions.

6. Relationship with Other Acts

Where a term is not defined in the CGST Act, reference may be taken from:

IGST Act
SGST Act
General Clauses Act, 1897

However, definitions under Section 2 take priority where provided.

7. Relevant & Connected Provisions

8. Professional Tip

Always begin GST analysis by checking Section 2. If a term is defined, no external meaning should be imported unless the context clearly demands it.

Disclaimer: This article is for educational and professional reference only. Readers are advised to consult a tax professional before taking any action.

Search This Blog

Tax Consultant