When a batsman hits a boundary, the fielders around can do nothing but watch the ball sliding into the fence. This is the effect of a perfect placement of the delivery by the batsman. Similarly, if the Government of India has introduced Place of Supply guidelines under GST to determine the taxes that are to be levied on the delivery of a particular good or a service.
Under GST regime, the 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.
The concept of GST eliminates all the indirect taxes. There are different tax sections under GST which are Central GST (CGST), State GST (SGST), Inter-state GST (IGST) and Union Territory GST (UTGST). To determine the section that is applied to the transaction of goods or services, the Place of Supply of the same is very important. The stature of the transaction is defined by the place of supply and location of the supplier. The place from which the supplier provides the goods or services is called the location of the supplier. The place at which the recipient procures those goods or services is called the place of supply.
There are several reasons for determining place of supply:
The following reasons make the determination of place of supply of services important:
The time of supply can be determined the one which is earlier of the following:
In case of the later, the one which is earlier of the following is selected:
In case there is a reverse charge, the earlier of the following will be considered as the time of supply:
The value of supply determines the amount of GST that is to be levied on the transaction. The value of supply has following attributes:
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).
|Type of Service||Place of Supply|
|Health, Beauty, Restaurant services||Location where the service is being performed|
|Training Services: Registered recipient||Location of the recipient|
|Training Services: Un-registered recipient||Location where the service is being performed|
|Amusement Parks, cultural events, sporting events||Location where the activity takes place|
|Goods transportation services: A Registered person||Location of the recipient|
|Goods transportation services: An Un-registered person|
|Passenger transportation services: A Registered person||Location of the recipient|
|Passenger transportation services: An Un-registered person||Place where the passenger embarks on the conveyance for a continuous journey|
|BFSI Services: A Registered person|
|BFSI Services: An Un-registered person|
|Immovable property services||Location of the service|
The place of supply of goods gets determined with the transaction taking place either inter-state, intra-state, is imported or exported.
Note: The supplier and the recipient should be registered at both the location of supplier and location of the recipient.
Following points further classify the place of supply:
Whenever there is any movement of goods by the supplier or the receiver or any other person involved in the transaction, the final destination of the delivery of goods will be the place of supply for this transaction.
Example: Consider the transaction of movement of 500 automobiles. The following table gives you a brief idea of the place of supply and tax that will be levied:
|Sr. No||Location of Supplier||Location of Recipient||Transport of goods done by||Goods delivered at||Tax to be levied||Place of Supply|
|1.||Pune, Maharashtra||Nagpur, Maharashtra||Supplier||Nagpur||CGST, SGST||Nagpur|
|2.||Pune, Maharashtra||Kolkata, West Bengal||Supplier||Kolkata||IGST||Kolkata|
|3.||Pune, Maharashtra||Pondicherry||Supplier||Pondicherry||CGST, UTGST||Pondicherry|
|4.||Pune, Maharashtra||Ahmedabad, Gujrat||Supplier||Aurangabad, Maharashtra||IGST||Ahmedabad|
|5.||Pune, Maharashtra||Bangalore, Karnataka||Recipient||Pune, Maharashtra||CGST, SGST||Pune|
|6.||Online seller (Registered in Chennai, Tamil Nadu)||Pune, Maharashtra||Supplier (e-Commerce giant)||Chennai, Tamil Nadu||IGST||Pune|
|7.||Online seller (Registered in Pune, Maharashtra)||Pune, Maharashtra||Supplier (e-Commerce giant)||Chennai, Tamil Nadu||CGST, SGST||Pune|
Whenever there is no movement of goods by the supplier or the recipient or any other third person involved in the transaction or if the goods are to be installed at any location, the location of the goods at the time of delivery or the place of installation of the goods will be the place of supply.
Consider XYZ Company has an order of supplying 100 lathe machines, the following table describes the place of supply and tax to be levied on such goods.
|Sr. No||Location of Supplier||Location of Recipient||Location of goods at||Installation of goods at||Tax to be levied||Place of Supply|
|1.||Pune, Maharashtra||Nagpur, Maharashtra||Pune, Maharashtra||CGST, SGST||Pune|
|2.||Indore, Madhya Pradesh||Indore, Madhya Pradesh||Indore, Madhya Pradesh||CGST, SGST||Indore|
|3.||Indore, Madhya Pradesh||Indore, Madhya Pradesh||Pune, Maharashtra||IGST||Pune|
|4.||Indore, Madhya Pradesh||Pune, Maharashtra||Indore, Madhya Pradesh||CGST, SGST||Indore|
|5.||Indore, Madhya Pradesh||Pune, Maharashtra||Pune, Maharashtra||IGST||Pune|
|6.||Indore, Madhya Pradesh||Pune, Maharashtra||Jaipur, Rajasthan||IGST||Jaipur|
Whenever the goods are supplied on a vessel, aircraft, train or motor vehicle location of the goods at the time of boarding of the goods will be the place of supply.
Consider a company provides fruit juice cans to aircraft, trains etc. for the customers who are travelling. The following table describes the place of supply and tax to be levied on such goods:
|Sr. No||Departure||Arrival||Location of goods boarded at||Tax to be levied||Place of Supply|
|1.||Pune, Maharashtra||Nagpur, Maharashtra||Pune, Maharashtra||CGST, SGST||Pune|
|2.||Indore, Madhya Pradesh||Delhi||Jaipur, Rajasthan||IGST||Jaipur|
The place of supply is not dependent upon the location where the buyer buys the products. It depends upon the location where the goods are boarded in the conveyance.
Whenever the goods are imported from one country, the place of supply is the location of the buyer and the tax to be levied on those goods is IGST.
Example: If Shweta imports L’Oreal Lipsticks from New York to Pune. The Place of supply will be Pune and the tax to be levied is IGST.
The goods which are exported will have the place of supply as the place where the goods are exported, and they are exempted under GST.
Example: If Shraddha exports Lakme lipsticks from Pune to London, the Place of Supply will be London, and they are exempted under GST.
The place of supply is the most important concept in the operations of GST as the place of supply determines the tax to be levied on the goods or the service. The place of supply, time of supply and value of supply together form the functioning of the GST System. earlyGST by H&R Block will provide effective assistance in filing your GST returns.