Place of Supply Under GST Explained

GST is a destination-based tax, meaning that the goods/services are taxed at the point of consumption rather than the point of origin. So that state would have the authority to collect GST where they are consumed. As a result, the place of supply is essential under GST because it is the focal point of all its requirements. The GST place of supply determines whether a transaction qualifies as intrastate or interstate and, as a result, how much SGST, CGST, and IGST will be levied. Therefore, cross-checking a supplier’s place using the GST search tool is recommended.

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Time Place and Value of Supply

Sections Under Place of Supply

The location of the place of supply is determined according to sections 10, 11, 12, and 13 of the IGST acts.

IGST Section 7 addresses interstate supply: Per section 7, supplies used in interstate trade or commerce must be treated.

Supply	Terms For Supply To Be Treated as the supply of Goods or Services in the course of inter-state trade or commerce
Supply of goods or services	Subject to the provisions of Section 10 or Section 12 for the supply of goods or services, respectively, where the provider and the site of delivery are located in:Two different statesTwo different Union territoriesA state and a Union territory
Imports	Himachal Pradesh
Export and Sez	When a supplier is located in India and the place of supply is outside India. Provide services to or on behalf of a special economic zone developer or special economic zone unit,ORSupply made within the taxable area is neither an intra-state supply nor covered by another provision of this section.

The IGST’s Section 8 addresses intra-state supply.- According to section 8 following supplies shall be treated as intra-state supplies.

Supply	Terms For Supply To Be Treated as a supply of Goods or Services As Intra-State Supply
Supply of goods or services	When the supplier and the place of supply are in the same state or union territory, the supply of products or the supply of services is handled as an intra-state supply, subject to the provisions of sections 10 and 12, respectively.
Goods supplied shall not be considered an intra-state supply.	The following commodities supply will not be considered an intra-state supply:The provision of commodities to or by a special economic zone unit.Items are brought into India until they pass through the country’s customs borders.Goods given to a tourist are defined in section 15
Services provided shall not be considered an intra-state supply.	The provision of services to or by a particular economic zone developer or a special economic zone unit is not considered an intra-state supply of services.

Section 10 – A location where goods are supplied other than those imported into or exported from India.
Section 11 – The location where products imported into or exported from India are supplied.
Section 12 – Place of supply of services where the location of supplier and recipient is in India
Section 13 – Place of supply of services where the location of supplier or recipient is outside India

Place Of Supply When There Is a Movement of Goods

Supply Type	Place Of Supply
Involves the movement of goods, whether by the supplier or buyer or by any other person	Location of the goods when the recipient is reached and the movement of the goods has ended.
Before or during the transportation of the goods, by way of a transfer of title in the goods or documentation, or in some other manner, goods are handed by the seller to the buyer in the direction of the third party (whether or not an agent).	The third party will supply the products in their primary location of business since it is considered that they have already received the goods.

Place Of Supply When There Is No Movement of Goods

Supply Type	Place Of Supply
No movement of goods, either by the supplier or by the recipient	The places where those things were when they were delivered to the receiver (at the time of transfer of ownership)
Goods are assembled or assigned at the site	Place of installation or assembly

Place Of Supply-Goods Supplied On a Vessel/Conveyance

Supply Type	Place Of Supply
Goods are on board a conveyance, vessel, train, aircraft, or motor vehicle.	Location at which such goods are taken on board

Imports and Exports under Place of Supply

The place of supply of goods:

The importer’s location will be imported into India.
Location outside of India must be specified as being exported from India.

Supply Type	Place Of Supply	GST
Products imported into India	Where is the importer located	IGST is always applied to imports.
Exported from India	Location outside India	GST on exports is eligible for a refund

Additionally, anytime an Indian company issues a foreign currency invoice. GST can be charged in other currencies, but you’ll need to provide the INR translation rate and IN values.

If you raised money in US dollars (USD), you might also charge GST in USD. Additionally, you must provide the invoice value in INR and the USD to INR conversion ratio.

To conclude, you can use a GST accounting software such as BUSY Accounting Software, to manage all your GST related tasks seamlessly.

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Place of Supply – Imports and Exports

Place of supply meaning in the context of imports and exports, determining the place of supply is crucial for calculating GST correctly. When goods are imported into India, the place of supply is always considered to be India, regardless of the country of origin. This is because goods are consumed within the country, making India the place of supply. Importers need to pay Integrated Goods and Services Tax (IGST) on these goods at the time of import, which they can later claim as input tax credit to offset their GST liabilities.

For exports, the situation is different. Goods or services supplied from India to another country are considered exports, and the place of supply is treated as outside India. Exports are zero-rated under GST, which means they are not subject to tax, but exporters can claim a refund on the taxes paid for inputs. This provision supports Indian exporters by reducing their tax burden and improving their competitiveness in the global market.

Frequently Asked Questions

What is POS under GST?

Place of Supply (POS) under GST determines the tax jurisdiction for a transaction. It identifies where a supply is considered to take place, affecting the type and rate of GST applied.
Is ITC restricted due to POS rules?

Yes, Input Tax Credit (ITC) may be restricted if the place of supply and the recipient’s location are in different states or jurisdictions, as some inter-state transactions are not eligible for ITC.
Which supply is exempt from GST?

Exports and certain specified goods and services are generally exempt from GST. Additionally, supplies to Special Economic Zones (SEZs) may also be treated as zero-rated, meaning no GST applies.
How does the place of supply affect GST?

The place of supply affects the type of GST applied—Central GST (CGST) and State GST (SGST) for intra-state, or Integrated GST (IGST) for inter-state transactions. Proper determination ensures accurate tax application.

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