Under GST regime, tax is determined on the basis of place, time and supply of goods and services. This guide by earlyGST will help you in determining the place of supply of services. GST Act lays down provisions for deducing the place of supply of services.
There are several reasons for determining place of supply:
The following reasons make the determination of place of supply of services important:
GST is levied at the place where goods and services are actually consumed. The revenue from GST collection goes to the state where this consumption occurs. Based on the place of supply and nature of transaction, three different sub-types of GST are levied. IGST is applicable where there is inter-state transaction. SGST and CGST become applicable where there is intra-state transaction.
So, before determining place of supply, we need to first determine two things:
Based on the following four different situations, the place of the recipient of service is determined:
The location of supplier of service is determined on the basis of the following situations:
Once we have determined the location of recipient and supplier of service, it becomes important to understand the transaction occurring between them. It helps in determining the sub-type of GST applicable in each case.
The transactions in terms of supply of services can be broadly categorized as below:
If both the parties involved in the transaction (supplier and recipient) are located in India then the transaction is considered as a domestic transaction. They are further categorised into two different types:
Note: In general, the place of supply for services will be the location of the service recipient if the recipient is a registered person. If the service is provided to an unregistered person, the place of supply will either be location of the service recipient (if the address is available on record) or it will be location of service provider.
If any of the parties involved in the transaction (supplier and recipient) are located outside India then the transaction is considered as an international transaction.
Note: The place of supply for services in terms of international transactions will be the location of service recipient or the location of the supplier (if the location of service recipient is not available).