"Place of supply" in GST refers to the location where the taxable event occurs. For goods, it's where the goods are supplied, and for services, it's where the services are provided. Understanding the place of supply is crucial for deciding whether to charge CGST/SGST or IGST on a tax invoice.
If the supplier's location and the place of supply are in the same state, it's considered an intra-state supply, subject to CGST and SGST. If they are in different states, it's an inter-state supply, subject to IGST.
Place of Supply Provisions - Sections 10 and 11 of the IGST Act, 2017:
Here are the key sections of the IGST Act, 2017, that deal with the place of supply in various scenarios:
Section 10: Place of supply of goods other than imports/exports
1. If the supply involves the movement of goods, the place of supply is where the movement ends and the goods are handed over to the recipient. For instance, if the supplier delivers goods to the recipient's factory, the place of supply is the recipient's factory.
2. If the supply does not involve the movement of goods, the place of supply is the location where the goods are delivered to the recipient. For example, if a supplier has a shop, and the recipient buys goods and takes responsibility for them at the shop, the place of supply is the supplier's shop.
3. A new clause states that if goods are sold to an unregistered person, the place of supply is the recipient's location if mentioned on the invoice. If not, it is the supplier's location.
4. If the supplier delivers goods to a recipient in the direction of a third person, the place of supply is the location of that third person.
5. If goods are assembled or installed at a site, the place of supply is the site where they are assembled or installed.
6. If goods are supplied on board a conveyance (vessel, aircraft, train, or motor vehicle), the place of supply is the location where those goods are taken on board.
Section 11: Import and export of goods
1. In the case of importing goods, the place of supply is the location of the importer, subject to IGST on a reverse charge basis.
2. In the case of exports, the place of supply is outside India, and no GST is levied.
Place of Supply Provisions - Sections 12 and 13 of the IGST Act, 2017:
Section 12 covers the place of supply for services in various cases:
1. In the case of services related to immovable property, including architects, interior decorators, surveyors, engineers, and estate agents, the place of supply is the location of the immovable property.
2. For lodging services provided by hotels, guesthouses, homestays, houseboats, clubs, etc., the place of supply is the location of the hotel or boat. This also applies to accommodations for events like weddings.
3. If the location of immovable property or hotels is outside India, the place of supply is the location of the recipient of the service.
4. In the case of restaurant and catering services, personal grooming, fitness, beauty treatment, and health services, the place of supply is where the services are actually performed.
5. For training and appraisal services, the place of supply is the location of the recipient if they are registered; otherwise, it's the location where the service is performed.
6. In the case of admission to cultural, artistic, sporting, scientific, educational, entertainment events, or amusement parks, the place of supply is where the event takes place or the park's location. However, if such an event or program is organized for a registered person, the place of supply is the location of that person.
7. In transportation of goods and passengers, the place of supply is the location of the recipient if they are registered. Otherwise, it's the place where the goods are handed over for transportation or where the passenger starts their journey.
Section 13:
Section 13 covers the place of supply for services provided or received outside India. The provisions are similar to services provided in India, which we discussed in Section 12. However, there are special provisions where the place of supply is the location of the service provider:
1. Banking services to account holders.
2. Intermediary services by agents.
3. Hiring means of transport, up to one month (excluding aircraft and vessels).
4. Online information and database access or retrieval services are provided to the location of the recipient of services.
5. The default rule is that if your service does not fit the above categories, the place of supply is the location of the recipient. If that information is not available, it's the location of the service provider.
In conclusion, understanding the place of supply is essential for proper GST compliance. It determines the applicable tax rate, whether CGST/SGST or IGST. Keeping abreast of these provisions and any amendments is vital for businesses. Advanced GST solutions like LogiTax can simplify this complex process, ensuring accurate tax compliance.
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