Relevancy/concept of determination of Place of Supply in GST in India


Place of Supply means the location where the supply of Goods or services of both have been affected. In simple words, place of supply means the place where goods/services are consumed for personal use or used in the course of furtherance of business.  Place of Supply is one of the prominent factors to determine the nature of supply i.e. whether the supply is ‘Inter-state’ supply or whether it is ‘Intra-state’ supply. It will help to decide that whether supply will be taxed with IGST or with CGST+SGST/UTGST or it is exports or it is an import transaction.

As per Section 7 and 8 of IGST Act, following is the list of situations where Place of Supply has impact to determine nature of supply:

Type of Supply

Nature of Supply

Where Location of the Supplier and Place of Supply are in :

>  Two Different States

>  Two different Union Territories

>  One in a State and other in a UT

Supply shall be treated as Inter-state Supply. This transaction will be charged with IGST

Where Location of the Supplier and Place of Supply are in:

> Same State or Same Unit Territory

Supply shall be treated as Intra-state Supply. This transaction will be charged with SGST plus CGST or UTGST

Where Location of Supplier of Goods is in India

and

Place of supply of goods is Outside India

It will be considered as Inter- state Supply. And it will be an export transaction.

Where goods bring to India from a place outside India

It will be considered as Inter- state Supply. And it will be an import transaction.

Where :

>  Location of Supplier of Service is in of India; and

>  Place of supply of Service is out of India; and

>  Location of Recipient of Service is out of India

It will be considered as Inter- state Supply. And it will be an export transaction (subject to further conditions of payments and distinct person)
Where :

> Location of Supplier of Service is out of India; and

> Place of supply of Service is within India; and

> Location of Recipient of Service is in India

It will be considered as Inter- state Supply. And it will be an import transaction.
Supply by/to SEZ developer or SEZ Unit to/by Non-SEZ units

I.e. Location of Supplier is in India and place of supply to SEZ unit/developer or vice – versa

It will be considered as Inter- state Supply.

  • Supply by Non-SEZ unit to SEZ unit will be considered as ZERO rated supply
  • Supply by SEZ unit to Non-SEZ unit will be considered as Imports and IGST will be charged on this transaction by SEZ unit.

Where Supply of Goods to a tourist from out of India

In this case:

Place of supply proposed to be Out of India and location of supplier is within India

It will be considered as Inter- state Supply. This transaction will be charged with IGST

There are various cases, where Place of Supply has much effect especially in case of Supply of services because there are so many circumstances where Place of supply changes with the change in circumstances. It is not an easy task to determine the place of supply of services because of the complexity to define status of particular transaction. It needs to be calculated carefully before making supply and invoiced to client.

Related articles :

How to determine Place of Supply of Services in GST in India (Other than Import/Export)

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