GST - A Destination Based Tax - Place of Supply Rules

By: Mr. Harshit Mogra - 7th December, 2020

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Introduction

Place of Supply holds an important place under GST regime. Nature of supply needs to be determined to know the place of Supply. Nature of supply can be classified as inter-state supply or intra-state supply.

Tax payment is made on the basis of nature of supply. CGST & SGST shall be paid on intra-state (within the same state or union territory) supply of goods and services. The Supply of goods and services that are made inter-state (to different state or union territory), IGST tax shall be paid. A tax paying individual must determine nature of supply correctly and pay the taxes in the correct head.

Location of place of supply and location of supplier are two main determinants of place of Supply.

Place of supply of goods other than import and export
  1. Where movement of goods is involved in the supply, whether by the supplier or the recipient or by any other person:-
    Place of supply - Location of the goods at the time at which, the movement of goods terminates for delivery to the recipient.
  2. It shall be deemed that the goods are received by third person where on the direction of such third person the goods are delivered to the recipient, or any person by way of transfer of title or otherwise:-
    Place of Supply - The principal place of business of such person.
  3. When there is no movement either by supplier or recipient of goods:-
    Place of Supply - location at the time of delivery to the recipient is considered to be place of supply of such goods.
  4. Where goods are assembled or installed at site:-
    Place of supply - location where goods are assembled or installed.
  5. Where the goods are supplied on-board a conveyance like a vessel, aircraft, train or motor vehicle:-
    Place of supply - location where the goods are taken on-board the conveyance.
  6. Where the place of supply of goods cannot be determined in terms of sub-sections (2), (3), (4) and (5):-
    Place of supply - determined in such manner as may be prescribed.
Place of supply of goods in case of import and export

In case of Import:- Place of Supply is location of the importer

In case of Export:- Place of Supply is outside India

Place of supply of services in case of Domestic Supplies
  1. Providing services in immovable property such as hotel accommodation:-
    Place of supply - location of immovable property.
  2. Services related to catering, restaurants, grooming, fitness, beauty and health:-
    Place of supply - location where the services is undertaken.
  3. Training and performance appraisal:-
    In case of B2B service, place of supply is the location of registered person. In case of B2C service, place of supply is the location where service is undertaken.
  4. Admission to an event or amusement park:-
    Place of supply - location of the park or where the event is held.
  5. Organisation of an event:-
    In case of B2B service, place of supply is the location of registered person. In case of B2C service, place of supply is the location where event takes place.
  6. Transportation of goods, including mails:-
    In case of B2B service, place of supply is the location of registered person. In case of B2C service, place of supply is the location where goods are placed on-board for transportation.
  7. Passenger transportation:-
    In case of B2B service, place of supply is the location of registered person. In case of B2C service, place of supply is the location where person embarks for journey on-board on the conveyance.
  8. Services on board a conveyance:-
    Place of supply - first station or place from which the conveyance departs.
  9. Banking and other financial services:-
    Place of supply - location of the recipient in the records of the supplier or location of the supplier of services when the location of the recipient is not available.
  10. Insurance services:-
    In case of B2B service, place of supply is the location of registered person. In case of B2C service, place of supply is the location of the recipient in the records of the supplier.
  11. Advertisement services to the Government:-
    The place of supply shall be taken as located in each of such States.
  12. Telecommunication services:-
    Place of supply - location of fixed equipment in case of services related to fixed line, circuits and dish.
    In case of mobile/Internet post-paid services, place of supply is the location of recipient's billing address.
    For prepaid vouchers, place of sale of voucher is taken as the place of supply.
Place of supply of services in case of cross-border supplies
  1. Services supplied for goods that are required to be made physically available by Service Receiver E.g. Repairs
    Place of supply - location where the services are actually performed
  2. Services supplied for goods that are required to be made physically available from a remote location by way of electronic means:-
    Place of supply - location where the goods are situated
  3. Providing services in immovable property such as hotel accommodation:-
    Place of supply is the location of immovable property.
  4. Admission to an event or amusement park:-
    Place of supply is the location of the park or where the event is held.
  5. If the below mentioned services are supplied at more than one location:-
    • Goods & individual related
    • Immovable property-related
    • Event related
      1. At more than one location, including a location in the taxable territory:-
        Place of Supply shall be the location in the taxable territory where the greatest proportion of the service is provided
      2. In more than one State:-
        Place of supply shall be each such State in proportion to the value of services provided in each State

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