Place of Supply under GST: A Complete Guide

Importance of the Place of Supply

• CGST and SGST are payable in case of intra-state trade or commerce i.e. intra-state supply of goods and services, IGST is payable in case of inter-state trade or commerce
• Principal behind the provision: The basic principle behind the provision relating to the place of supply is that GST is a destination-based tax. Tax is finally payable where goods and services are consumed.
• Meaning of supply of goods or services or both during interstate trade or commerce
• Sec 7 of IGST Act make provision in respect of the supply of goods or services of goods or services during inter-state trade or commerce.
• Inter-state supply of goods/ services: As per sec 7(1) of IGST Act, supply of goods/Services in the course of inter - state trade or commerce means any supply where the location of the supplier and the place of supply are in two different states or two different union territories or a state and union territory.
• Import of goods/services shall be deemed to be inter-state supply - Supply of goods imported into the territory of India. Till the goods cross the customs frontiers of India shall be treated to be a supply of goods/services during inter - state trade or commerce - sec 7(2) of IGST Act.

Meaning of supply of goods or services or both during intra-state trade or commerce

• Sec 8 of IGST Act make provision in respect of supply of goods or services or both during intra - state trade or commerce.
• Intra-state supply of goods - As per sec 8(1) of IGST Act, supply of goods where the location of the supplier and the place of supply of goods are in same state or same union territory shall be treated as intra - state supply. This is subject to the provision of sec 10 of IGST Act.

The intra-state supply of goods shall not include -

(I) Supply of goods to or by a SEZ developer or to by an SEZ unit.

(ii) Supply of goods brought into India during import till they cross the customs frontiers of India.

(iii) Supplies made to a tourist under sec 15 of IGST Act.

Section 10 of IGST Act,2017 - Place of supply of goods other than imports and exports

Scope: Applies where the supply is neither import nor export i.e., both supplier and recipient are in India.

• Section 10 of the (IGST) Act, 2017 deals with the "Place of Supply of Goods Other than Supply of Goods Imported into or Exported from India."
• This section is crucial because the place of supply determines whether a transaction is inter-State (attracting IGST) or intra-State (attracting CGST and SGST).

General Rules

1) Movement of goods 10(1)(a)

• Nature of supply - Involves movement of goods (by supplier, recipient, or third party).
• Place of supply - Location where the movement terminates for delivery.

2) Bills-to-ship- to 10(1)(b)

• Nature of supply - Third party directs delivery to someone else.
• Place of supply - Principal place of business of the third person (Who works as an agent)

3) No movement 10(1)(c)

• Nature of supply - No movement of goods (e.g. pick up from seller or consumed at seller place).
• Place of supply - Location where goods are at the time of delivery.

4) Unregistered person 10(1)(ca) (w.e.f.01/10/2023)

• Nature of supply - Supply to an unregistered person.
• Place of supply - Address mentioned in the invoice. If not mentioned, then the location of supplier.

5) Installation for assembly 10(1)(d)

• Nature of supply - Installation of assembly of goods at the site.
• Place of supply - Place of installation/ assembly.

6) Onboard a conveyance 10(1)(e)

• Nature of supply - Supply onboard a conveyance.
• Place of supply - Location where goods are taken on board

7) Not determined 10(2)

• Nature of supply - If Pos cannot be determined.
• Place of supply - As prescribed under rules (if notified).

Section 11 of IGST Act,2017 - Place of supply of Imported or Exported Goods

Scope: To determine the place of supply in case of import/export of goods.

• Section 11 of the IGST Act, 2017 specifically deals with the Place of Supply of Goods Imported into or exported from India.
• A crucial factor for determining applicability of IGST, input tax credit (ITC) eligibility, and classification of a supply as inter-state.

General Rules

1) Import of goods into India 11(a)

• Type of supply - Import of goods into India
• Place of supply - Location of importer
• Implication on GST - Treated as inter - state supply - IGST applicable at the time of custom clearance

2) Export of goods from India 11(b)

• Type of supply - Export of goods from India
• Place of supply - location outside India
• Implication on GST - considered zero-rated supply under section 16 of IGST act -eligible for refunded under LUT or payment of IGST

Section 12 of IGST Act,2017 - Place of supply of services (Domestic Transactions)

Scope: The location of the supplier and the location of the recipient is in India.

• Section 12 of IGST Act, 2017 Deals with: Place of supply of services where the location of supplier and recipient is in India (i.e., Domestic Supply of Services).
• This section is crucial in deciding whether the supply is intra-state (CGST+SGST) or inter-state (IGST)

1)  Services to registered person 12(2)(a)

• Place of supply - Location of recipient
• Special rules - default rule for B2B transactions

(It covers all services that are not specifically covered under sub-sections (3) to (14) (like transportation, real estate, etc.).)

2) Services to unregistered person12(2)(b)

• Place of supply - (i) If address is available - recipient's location(ii) Otherwise - supplier's location
• Special rules- default rule for B2C transaction

3) Services related to immovable property 12(3)

• Place of supply - (i) location of property /boat/ vessel.(ii) if located outside India - recipient's location
• Special rules- Applies to architectures, engineers, event hotels.

4) Restaurant, catering, personal grooming, fitness, cosmetic/plastic surgery 12(4)

• Place of supply - where the services actually performed
• Special rules - Place of actual physical performance

5) Training and performance appraisal 12(5)

Place of supply - (a) registered person - recipient's location

(b) unregistered - location of performance

Special rules- differentiated by registration status

6) Admission to events, amusement parks, etc. 12(6)

• Place of supply - place where event held or park located
• Special rules -includes ancillary services (services that are closely linked to a principal supply, and may not have an independent existence or purpose)

7) Organization of events/sponsorships 12(7)

Place of supply - (a)Registered person - recipient's location

(b)unregistered person-location of event if held outside India - recipient's location

Special rules - includes fairs, exhibitions, celebrations

8) Goods transportation 12(8)

Place of supply-

(a) Registered person - recipient's location

(b)Unregistered person - Location where goods handed over for transport

Special rules - Includes courier/mail

9) Passenger transportation 12(9)

Place of supply-

(a) Registered person - Recipient's location

(b) Unregistered person - Place of embarkation Right to passage (future use)- follow 12(2)

Special rules - Return journey treated as separate.

10) Onboard services 12(10)

• Place of supply - First schedule departure point
• Special rules - Consumption could be any time after boarding

11) Telecommunication services 12(11)

Place of supply -

Varies by mode:

(a) Fixed line installation location
(b) Postpaid billing address
(c) Prepaid via agent's address
(d) Prepaid direct location of recharge
(e) Online payment recipient's recorded location
(f) If address of recipient not available location of supplier

Special rules - Convert DTH, internet, mobile

12) Banking, financial, stock, and broking services 12(12)

• Place of supply - Recipient's location as per supplier records if not available - supplier location
• Special rules - Evidence-based determination

13) Insurance services 12(13)

Place of supply -

(a) Registered person - Recipient's location

(b)Unregistered person - Location as per supplier's records

Special rules - Differentiated by status

14) Advertisement to Govt/ statutory bodies 12(14)

• Place of supply - Deemed supply in each State/UT proportionate to dissemination
• Special rules - Requires breakup via

Section 13- IGST Act, 2017: Determine place of supply of services(when either party is outside India)

Scope- The provisions of this section apply only when either the supplier or the recipient of the service is outside India.

To determine the place of supply of services when either supplier or recipient is located outside India.

General rule

1) RESIDUARY CLAUSE 13(2)

• Place of supply- location of recipient (if unknown - location of supplier)
• Key consideration - apply to all services except those listed 12(3) to 13(13)

2) Services in respect of goods made physically available by recipient 13(3)(a)

• Place of supply- location where services actually performed
• Key consideration - remote services via electronic means - Pos= location of goods at time of services

3) Services requiring physical presence of recipient 13(3)(b)

• Place of supply - location where services actually performed.
• Key consideration- includes cosmetic surgery, personal coaching abroad.

4) Services related to immovable property 13(4)

• Place of supply- location of the property (whether in India or abroad)
• Key consideration- include architect, interior design, lodging, etc.

5) Admission to or organisation of events (culture, sports, education, entertainment) 13(5)

• Place of supply- location where the event is held.
• Key consideration- includes services ancillary to admission/organisation.

6) Services under 13(3), (4), (5) at multiple locations. Including taxable territory 13(6)

• Place of supply- location is a taxable territory.
• Key consideration-enforces taxability in India even if a part of the service is provided outside India.

7) Services under 13(3), (4), (5) across multiple States/UTs 13(7)

• Place of supply- each representative state/UT proportionately
• Key consideration- value breakup based on contract or prescribed method.

8) Services by banking company, FI, NBFC to account holders 13(8)(a)

• Place of supply- location of supplier
• Key consideration- include internet banking, advisory to NRE account holders

9) Intermediary services 13(8)(b)

• Place of supply- location of supplier
• Key consideration- includes commission agents, brokers, etc.

10) Short-term hiring of means of transport (except aircraft/ vessels) 13(8)(c)

• Place of supply- location of supplier
• Key consideration- duration: up to 1 month. includes hiring of yachts, cars.

11) Passenger transportation services 13(10)

• Place of supply- place where passengers embarks for journey.
• Key consideration- boarding point = taxable point.

12) Services provided on board a conveyance 13(11)

• Place of supply- first scheduled departure point of conveyance.
• Key consideration- includes meals, entertainment onboard flight/train.

13) OIDAR services (online information and database access or retrieval)13(12)

• Place of supply- location of the recipient
• Key consideration- deemed location in India if any 2 of 7 parameters( like IP, billing address, SIM country code, etc.) match

14) Notified services for uniformity or to prevent double /non-taxation 13(13)

• Place of supply- as notified - place of effective use/enjoyment
• Key consideration- power with the government to notify special rules.

Section 14 - IGST Act, 2017: Special provision for OIDAR Services

Scope: This section provision for taxability, registration, and compliance in respect of cross-border OIDAR services by non-taxable online recipients in India.

1) Sub-section 14(1)

• Provision - Supply of OIDAR services by a foreign supplier to a non-taxable online recipient (NTR) in India
• Legal outcome - Supplier outside India is liable to pay IGST

2) Proviso to 14(1)

• Provision - Intermediary located in non-taxable territory or involved in arranging the services
• Legal outcome - Intermediary deemed recipient & supplier of service unless conditions (a)-(d) below are met

(a) Condition (a)

• Provision - Invoice/receipt identifies services and actual supplier (not the intermediary)
• Legal outcome - Intermediary not treated as supplier

(b) Condition (b)

• Provision - Intermediary does not process payment or authorize charge
• Legal outcome - Intermediary exempt from IGST liability

(c) Condition (c)

• Provision - The Intermediary does not authorize delivery
• Legal outcome- Further strengthens exemption

(d) Condition (d)

• Provision - Supplier, not intermediary sets general terms of services
• Legal outcome - Completes exemption framework

3) Sub-section 14(2)

• Provision - Supplier to obtain registration under Simplified Registration Scheme
• Legal outcome - Single registration required for all India supplies

4) First provision to 14(2)

• Provision - If foreign supplier has representative in India, such person must register and pay tax
• Legal outcome - Indian representative becomes liable for IGST

5) Second provision to 14(2)

• Provision - If not presence or representative in India, supplier must appoint a person in India to pay tax
• Legal outcome - Appointed person becomes liable for payment