A taxpayer must pay tax at the time and according to the place of supply under the GST law. The location where services are supplied is also where they are consumed.
Under the IGST Act, “Place of Supply” provisions are explained. Here we will explain the “Place of supply of goods under GST” in detail.
However, there are particular situations or regulations for determining the place of supply or services provided directly in connection with real estate, shipping, and other services.
Let’s first understand the importance of a precise supplier location determination for organisations. The following are some of the reasons for it.
GST is a location-based tax, also known as a consumption tax. As such, tax is imposed and paid to the state where goods and services are consumed. There are three tax levels under GST: IGST, CGST, and SGST. Each level’s tax is assessed based on the supplier’s location and the location of the “Place Of Supply” as defined by the government.
When a transaction is intra-state, CGST and SGST are imposed, while IGST is imposed when the transaction is inter-state. The following two ideas are crucial for comprehending where services are supplied:
|Case||Location Of Recipient Of Service|
|When a supply is made at an establishment where registration has been obtained||Such a place of business|
|When a supply is made somewhere other than the business location for which registration has been obtained (a fixed establishment elsewhere)||Such fixed establishments|
|If a supply is received at more than one institution, whether it is a fixed establishment or a location of the business||The location of the establishment that is most directly involved with supply receipt|
|In the absence of such places||The location of the recipient’s typical residence;|
|Case||Location Of Supplier Of Services|
|When a supply is made from an establishment where registration has been obtained||The location of such a place of business|
|If a supply is made outside of the location where registration has been secured for the business (a fixed establishment elsewhere)||Where such an established establishment is located;|
|Whenever a supply is made from more than one establishment, whether it be a permanent or commercial location,||the location of the establishment where supply provision is most directly concerned|
|In the absence of such places,||The place where the supplier’s primary residence is;|
The following categories can be used to broadly group transactions involving the supply of services:
Domestic transactions refer to transactions where both the service provider and recipient are Indian citizens. These transactions can be classified as Inter-State (between two different states) or Intra-State (within the same state).
General Rule: The place of supply for services will be the location of the service recipient, provided that the recipient is a registered person. However, when the service is rendered to an unregistered person, the site of supply will depend on the availability of address information:
In these transactions, the service recipient or the service provider is outside India.
General Rule: For services considered international transactions, the following location must be used: