GST is one of the important enactment in the free India, which intends to change the entire indirect taxation regime, both taxation and filing aspects. This was a result of lengthy discussion and deliberations.
Determination of place of supply of goods or services is very important in GST as the system involves many states and different nature of taxes to be paid. There are three major types of taxes under the GST regime. They are
- CGST Central Goods and Service Tax
- SGST/ UGST State Goods and Service Tax/ Union Territory Goods and Service Tax
- IGST Integrated Goods and service Tax
If the goods or services are supplied within the state, both CGST and SGST is applicable and if the goods or services re supplied in different states. IGST will be levied.
So the most important task in taxing goods or services under GST regime is the determination of place of supply. We are trying to explain the task with some examples.
What is the Place of Supply in case of Goods under GST?
|S. No.||Nature of Transaction||Place of Supply of Goods|
|1||Movement of goods are involved in the supply||Location where the goods are delivered to the recipient (Example 1)|
|2||No movement of goods are involved in the supply||Location at the time of delivery ( Example 2)|
|3||Goods assembled or installed at site||Where assembly of installation took place (Eg 3)|
|4||Goods supplied on board a conveyance such as vessel, aircraft, train, motor vehicle etc||Location where the goods loaded to the conveyance.(Eg 4)|
|5||Supplier delivering to a recipient on directions of a 3rd person||3rd persons principal place of business for the 1st leg of the supply and location of delivery to recipient for the 2nd leg. (Example 5)|
Place of Supply in case of Services under GST
|S. No.||Nature of Transaction||Place of Supply|
|1||Service is provided to a Registered Recipient||Location of such Recipient|
|2||Unregistered Recipient receiving the service||Address of the recipient is available – Place of Supply is the Location of the Service Recipient. Address of the recipient is not available – Place of supply is the Location of the Service provider.|
|3||Services directly relating to Immovable Property|
|a. If property is located in India||Place where the Immovable Property is located (Example 6)|
|b. If property is located outside India||Location of Recipient.(Example 6)|
|4||Performance based services namely Restaurant & Catering, Personal Grooming, Fitness, Beauty Treatment, Health Services including Cosmetic & Plastic Surgery.||Place where the services are actually performed. (Example 7)|
|5||Admission to an event||Where the Event is held (Example 8)|
|6||Service on board a conveyance||First scheduled point of departure. (Example 9)|
|7||Banking & Financial service (including stock broking)|
|a. If Location of the Recipient is available on record of the supplier.||Location of the Service Recipient (Example 10)|
|b. If Location of the Recipient of service is not available on record of the supplier.||Location of the Service Provider (Example 10)|
|8||Insurance service (whether provided to registered or unregistered person)||Location of Service Recipient (Example 11) (Location of Service Recipient on record in case of Unregistered person)|
Example of Place of Supply of Goods
Example 1: Ram from New Delhi purchases a Laptop from an Electronic store in Mumbai. The laptop is delivered by the shop owner to Ram’s residence in New Delhi.
In this case, the place of supply would be considered to be New Delhi as the laptop has been delivered in New Delhi.
Example 2: Ram from New Delhi purchases a Laptop from an Electronic store in Mumbai. Karan takes the delivery of the laptop in Mumbai itself and brings it to New Delhi in his own car.
In this case, the place of supply would be considered to be Mumbai as the laptop was in Mumbai at the time of delivery of the laptop.
Example 3 A firm purchases a conveyor belt to be installed in their Bangalore office from a vendor in Chennai.
In this case, the place of supply would be considered as Bangalore as the conveyor belt has been installed in Bangalore.
Example 4: Ms Lakshmi boards a flight from Cochin to Hyderabad and purchases a sandwich in flight during the journey. As the sandwich was taken on board the plane, the place of supply would be Cochin.
Example 5: A trader in consumer durables has a sales outlet in Chennai and a godown in Bangalore. A resident of Bangalore goes to the Chennai outlet, buys an air conditioner and instructs that the delivery be made at his residence in Bangalore. Gurgaon office arranges for delivery of air-conditioner from its Bangalore godown. This transaction involves 2 IGST supplies i.e.
- By Chennai outlet to Bangalore resident; and
- By Bangalore godown to Chennai outlet
In the above example, the goods were never delivered to the Chennai store but were directly delivered from Bangalore store to Bangalore buyer. However, as the Bangalore godown has delivered goods to the customer on the directions of the Chennai store(here 3rd person), it will be deemed that the Chennai store has received the goods and then supplied these to the customer.
Example 6: If Mr. A of Hyderabad has property in Cochin and avails architect services from Mr. B of Bengaluru, then the place of supply would be Delhi as the supplier, recipient and property are located in India. However, if such property is located in Japan, then the place of supply would be Hyderabad that is location of the service recipient.
Example 7: Mr. Gopal of Bangalore visits a hotel located in Dehradun and stays in the hotel for 3 days. He avails of the gym and restaurant service and makes individual payment for these services. The place of supply would be Dehradun as the services have been provided in Dehradun.
Example 8: Mr. Raju of Cochin purchases a ticket for watching a movie in a Kolkata cinema hall. The place of supply in this case would be Kolkata.
Example 9: A caterer is providing catering services on-board in train during Delhi-Lucknow-Gorakpur which is not included in the fare charges. The place of supply in this case shall be the location of the 1st scheduled point of departure of the conveyance for that journey i.e. Delhi.
Example 10: Narayan of Delhi who has a savings bank account with Federal Bank of Delhi gets a DD issued from Federal Bank at Mumbai, the place of supply will be Delhi as N’s address is in the records of the Bank. However, if Narayan gets a DD issued from IDBI Bank of Raipur, without having a bank account there, the place of supply would be IDBI, Raipur.
Example 11: Mr. Alok residing in Cochin, travels by Indigo flight from Chennai to Delhi and gets travel insurance done in New Delhi. The place of supply is Cochin, being the location of the recipient on records of the Insurance Company.
Examples of Services directly relating to Immovable Property
- By Architects, Interior Decorators, Surveyors, Engineers and other Related Experts;
- By estate agents;
- By way of grant of rights to use immovable property;
- By way of lodging accommodation by a hotel, inn, guest house, homestay, club or campsite, house boat or any other vessel; and
- By way of accommodation in any immovable property organising any marriage or reception or matters related herewith, official, social, cultural, religious or business function.
What is the Place of Supply under GST in case of Export/ Import
In case of Goods, the following would be the place of supply
|S. No.||Transaction||Place of supply|
|1||Import||Location of Importer|
|2||Export||Location outside India|
General Rule for Determining Place of
Cross Border Supply of Services
In case of services, in case of supply of services outside India – the location of the recipient of service is the place of supply. However, in case the location of recipient of service is not available in the ordinary course of business, the place of supply shall be the location of the supplier of service.
Exception to the General Rule of Place of Cross Border Supply of Services
Following are the key exceptions to the principal rule of cross border supply of services
|S. No.||Categories||Place of Supply|
|1||Services directly in relation to Immovable Property||Location of Immovable Property|
|2||Performance based Services||Location where services are actually performed|
|3||Transportation of Goods, other than by way of mail or courier||Place of Destination of Goods|
|4||Passenger Transportation Services||Where the customer embarks on the conveyance for a continuous journey.|
|5||Services supplied by a banking company, financial institution, non-banking financial company to account holders.||Location of the supplier of service.|
|6||OIDAR – Online Information and Database Access or Retrieval Services||Location of the Recipient of Service.|