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Where Is GST Applicable? A Section-by-Section Examination of the IGST Act, 2017 1. Introduction: The Significance of 'Place of Supply' in Tokenized Assets "Place of Supply" (POS) is more than just a technical concept under India's GST framework; it determines three crucial compliance questions: 1
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The Place of Supply (POS) determines whether a transaction is inter-state (IGST) or intra-state (CGST+SGST), which state government receives the tax, and if the supply is considered domestic or an export of service.
Under Section 12(3) of the IGST Act, services directly related to immovable property have their POS at the location of the property. This rule overrides the general default rule for such services.
For fund management fees charged to an SM REIT trust by an Investment Manager located in India, the POS is the location of the registered recipient (the trust) under Section 12(2)(a), resulting in intra-state CGST+SGST.
When one party is outside India, Section 13 of the IGST Act applies. For services where the recipient is outside India, the POS is the recipient's location, potentially qualifying the supply as an 'Export of Service' (zero-rated).
An incorrect POS determination can lead to paying the wrong type of GST (IGST instead of CGST+SGST, or vice versa). This error may not always be rectifiable by ITC and could require a refund claim under Section 77 of the CGST Act or Section 19 of the IGST Act.
The Finance Act, 2026 deleted Section 13(8)(b) of the IGST Act. This means intermediary services now generally follow the default rule (Section 13(2)), where the POS is the recipient's location, which is beneficial for qualifying cross-border transactions as exports.
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