Place of Supply under GST is explained thoroughly in this article! GST has been implemented but people are confusing in adapting its rules and necessary provisions. GST has merged 17 types of taxes in itself reducing the cascading effect or multiple taxations on a single income such as sales tax, service tax etc. GST structure is divided into four categories CGST, SGST, IGST, UTGST.
The levy of Tax under the GST act is based on two things from which one is,”Location of Supplier and another one is “Place of Supply”.
Location of Supplier – It is the registered place of supplier’s Business.
Place of Supply – In GST, it is the registered Place of recipient’s business but there are certain rules which we will go to discuss in this article.
What is Place of Supply under GST?
In order to determine the nature of goods, it is important to understand the “Place of Supply” of such goods and services. The reason behind such is determining whether CGST and SGST or IGST will be applicable on such.
CGST and SGST are applicable on intrastate supplies while IGST is applicable on interstate supplies and this can be determined by the Place of Supply.
Place of Supply Rules in GST
Place of Supply Rules under GST For “Goods”
Q. What will Place of Supply where the supply involves a movement of goods, whether by the recipient or supplier or third person?
Ans. Place of Supply shall be determined by the location of the goods at the time of Final Delivery to the recipient.
Example – Mr. Raj, a trader of Rajasthan received an order to supply his goods to a dealer in Maharashtra. For this, Mr. Raj ordered his one of the branch in Banaras to supply goods to the dealer in Maharashtra. In such a case, goods have moved from Banaras to Maharashtra thus the place of supply will be Maharashtra and in such a case IGST will be applicable.
Q. What will Place of Supply where the supply of goods is made on the direction of third Party, it may be an agent or not?
Ans. Where the goods are delivered to the recipient or any other person on the direction of the third party, the Place of Supply shall be determined as the registered place of business of the third party, irrespective where the goods have been delivered.
Example – A dealer of Rajasthan deals with a dealer of Gujarat to supply the goods but the dealer of Gujarat directed the dealer of Rajasthan to supply the goods to Delhi at one of his customers. Here in the given case, although the goods have been moved to Delhi directly the place of Supply will be considered as the principal place of business of the third party i.e. Gujarat.
Q. What will be the place of Supply in GST where it does not involve the movement of goods?
Ans. Where the supply does not involve any movement of goods then place of supply shall be the location of goods at the time of delivery to the recipient.
Example – Mr. Arjun has a business establishment in Bangalore but purchased a workstation in Delhi from Ms. Sunita having the business establishment in Delhi. Here the supply of goods does not involve any movement as it as an immovable property. Hence Place of Supply in such a case shall be Delhi, the location of goods at the time of Final delivery. This will be considered as an intrastate Supply and thus attract CGST and SGST.
Q. What will be the place of Supply in case of installation or assembling of goods at the site?
Ans. Here the place of supply will be the place at which goods are assembled or installed at the site.
Example – Ms. Komal has appointed Ms. Seema having a business establishment in Lucknow for the installation of the lift in his workstation for his Lucknow branch. Then in such a case, Place of Supply shall be deemed to be the place where the goods are installed. Place of Supply in such a case will be Lucknow, thus CGST and SGST will be applicable.
Q. What will be the Place of Supply where the goods are being supplied on a board like a vehicle, vessel, train, aircraft, or motor etc?
Ans. In above case, Place of Supply shall be the location where the goods are boarded on the conveyance.
Example – Flight is ready to travel from Delhi to Goa. Food is served by the third agency to be served on the flight during the travel. Hence, the Place of Supply will be Delhi because the first location where the goods are boarded to served on the flight in Delhi.
Q. What will be the Place of Supply where the same could not be determined by Sub Section (2), (3),(4), and (5)?
Ans. In such a case, Place of Supply shall be determined in such a manner as may be prescribed.
Place of Supply Rules in GST For “Services”
Q. What will be the Place of Supply where the services are provided in respect of an immovable property?
Ans. In respect of immovable property, Place of Supply shall be the place where the immovable property is situated or supposed to be.
Example – Ms. Swati has given a contract of construction of workstation in Punjab to Mr. Vikas has a business establishment in Gujarat. In such a case, immovable property is supposed to be located in Punjab. Hence, the Place of Supply shall be Punjab.
Other Examples – Hotel Accommodation etc.
Q. What will be the place of Supply where the service required the physical presence of both the service provider and service receiver?
Ans. Where the service required the physical presence of both the service provider and service receiver, Place of Supply shall be placed where the services have been provided.
Example – Ms. Ruchi has provided beautician services to Ms. Poorva in Rajasthan. Here the service required the physical presence of both Ms. Ruchi and Ms. Poorva hence the place of supply shall be the place where the services are performed. In such a case, Place of Supply shall be Rajasthan.
Other Example – Catering, Restaurant, fitness, personal grooming, consultancy and health services etc.
Q. What will be the Place of Supply in respect of admission to an event or amusement park?
Ans. In respect of admission to an event or amusement park, the place of supply shall be the location where the event is held or amusement park is located.
Example – Mr. Arpit organized an event in Hyderabad. Here the Place of Supply shall be the location where the event has to take place i.e. Hyderabad.
Q. What will be the Place of Supply in respect of organization to an event or other ancillary activities?
Ans. The Place of Supply in case of the organization of an event if take place with the registered person then it shall be the location of such registered person.
But where the organization of an event takes place with the unregistered person, place of supply shall be the place where the event is held.
Q. What will be the Place of Supply in case of Transportation of goods?
Ans. The Place of Supply in case of Transportation of goods shall be the location of the recipient if he is registered. However, in case of the unregistered person, the Place of Supply shall be the location of goods where they have started for transportation.
Q. What will be the Place of Supply in case of Transportation of passengers?
Ans. Place of Supply shall be the location of the passenger if he is registered or the location where he embarks his journey if he is unregistered.
Q.What will be the Place of Supply in case services are given on a conveyance like a vessel, vehicle, train or aircraft?
Ans. Where the services are provided on a conveyance, the Place of Supply shall be the first schedule point of departure of that conveyance.
Q.What will be the Place of Supply in case of Telecommunication Services?
Ans. The Place of Supply in case of prepaid mobile or Internet connection shall be determined as the billing address of the recipient.
However, in case of installation of Fixed Leased line, Internet leased line, cable or dish antenna, Place of Supply shall be the place of their installation.
In case of telecom services provided through the internet banking or E-wallets like Paytm, Free recharge, the Place of Supply shall be determined as the address of the recipient available on the record of such companies.
Q.What will be Place of Supply in case of services provided to Banks or other Financial Institutions?
Ans. The Place of Supply shall be the location of the recipient of the service available in the records of Banks or other Financial Institutions (in case of account holders).
However, services provided by banks or financial institutions to the non account holders or whose address is not mentioned in its record Place of Supply shall be the location of the supplier of service.
Example – Individual, non account holder taken the service of Demand Draft from the Bank. In such a case, Under GST, Place of Supply shall be the location of Bank.
Q. What will be the Place of Supply in case of Insurance Services?
Ans. The Place of Supply in case of Insurance Services shall be the location of the recipient in case he is registered. And for the non registered persons, In GST, Place of Supply shall be the location of the recipient maintained in the records of the service provider.
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