Place of Supply

Importance under GST

How to work out place of supply

of services for GST

Whenever a supply of services is there then for

GST purposes, it is essential to know the 'place
of supply'.
Whenever there is a supply of goods it is
comparatively easier to identify the place of
supply.
In the Indian context the place of supply
determines which GST rules should be used
whether IGST or SGST and how the dealers
have to account for the GST on the sale

Place of Supply-meaning
As a rule the place of supply of service is legal address
or place of residence of the supplier. However, the place
of supply for different kind of activities would differ.
In simple terms the place of supply is the place where a
supply is made and where GST may be charged and
paid.
Determining the location of supply of services may be
difficult specially in interstate services.
In some cases, the place of supply is determined by
what service is supplied rather than where the supplier
or the consumer belongs

Difficulty in deciding place of

Supply
With services, deciding the place of supply
can be complicated. There are various
rules that apply, depending on:
whether dealers have more than one
business location
the kind of service they provide
the place where their business or their
business customer 'belongs'

Which GST rules to use when charging

GST on services
If a dealer is in One State and the place of
supply of service is in that State, the
dealer may have to charge and account
for GST according to State GST rules.

How to charge and account for GST on

the goods or services supplied
In general terms
for all the business to business transactions
the place of supply should be the place of
business of the recipient dealer.
In this case, IGST would apply if the user of the
service is located in a different state, otherwise
SGST would apply

For business to consumer transactions the

place of supply is the place of business of
supplier dealer.
For this case, SGST would apply irrespective of the
consumers place of residence

Specific services-Immovable
Property
In some cases, the place of supply is determined by
what service is supplied, rather than where the supplier
or the customer belongs.
For such services, special rules tend to be defined

Immovable property (not dealt in detail as the GST

design does not speak about it)
The place of supply of services of admission to
cultural, artistic, sporting, scientific, education, or
entertainment events or
similar events such as fairs, and exhibitions and
services and ancillary services related to admission

Specific Servicestelecommunication
Telecommunication Services-supplies of
Telecommunication services are treated
as taking place generally in the place of
establishment of the supplier.
The territory where switching,
interconnection or termination services
are provided without any additional
human intervention is not considered as
place of supply for this service.

Specific ServicesTelecommunication
The place where a service is supplied is
the place where dealer has his permanent
address or resides etc. needs to be
known.
Input tax credits to Telecom services
providers should be also special
category
Whether it is necessary to tax imported
services

Electronically supplied services

(1) When a particular supplier makes a particular supply of a

computer-related service or access to the Internet and if there is
only one final recipient of the service or access, who acquires it
under an agreement either with the particular supplier or another
supplier,
(a) if there is a single ordinary location at which the final recipient
avails themselves of the service or access, that location is in a
particular State and either the particular supplier maintains
information sufficient to determine that location or it is the normal
business practice of the particular supplier to obtain information
sufficient to determine that location, the particular supply is made in
that State; and
(b) in any other case, the particular supply is made in a particular
State if the mailing address of the recipient of the particular supply is
in that State.

 When a particular supplier makes a particular supply of a

computer-related service or access to the Internet and
there are to be multiple final recipients of the service or
access, each of whom acquires it under an agreement
with the particular supplier or another supplier,
(a) if, in the case of each of those final recipients, there
is a single ordinary location at which the final recipient
avails themselves of the service or access and either the
particular supplier maintains information sufficient to
determine that location or it is the normal business
practice of the particular supplier to obtain information
sufficient to determine that location,
(b) if a State in which the particular supply is made is not
determined the particular supply is made in a particular
State if the mailing address of the recipient of the
particular supply is in that State.

Electronically supplied services

If there is to be a single final recipient of a supply of a computerrelated service or Internet access made by a particular supplier, and
the recipient acquires the supply under an agreement with either the
supplier or another
supplier, the supply is made in a province if the final recipient avails
itself of the service or access at a single
ordinary location in that province, and either:
the particular supplier maintains information sufficient to determine
that location; or
it is the normal business practice of the particular supplier to obtain
information sufficient to determine that location.
In any other case where there is to be a single final recipient of the
supply, the supply will be made in a province if the mailing address
of the recipient of the supply is in that province.

Electronically supplied services

A different place of supply rule applies if there are
multiple final recipients of a supply of a computer related
service or Internet access made by a particular supplier
and each final recipient acquires the supply under an
agreement with either the particular supplier or another
supplier and, in the case of each final recipient, there
is a single location at which the final recipient avails itself
of the service or access and
either the particular supplier maintains information
sufficient to determine that location; or
it is the normal business practice of the particular
supplier to obtain information sufficient to determine
that location.

Banking and other Financial

Services
Services provided by the bank to the
customers Bank is liable to pay on the
destination principle
If the services of any other kind are
catered to the businesses then the State in
which the businesses are situated the tax
would occur to that State.

Banking and other Financial

Services

General Insurance-Policies are issued in

the local office and hence the tax is due to
the State where the local office is situated.

Working out the place of supply-Hiring

out Transport
hiring out a means of transport depends upon the length
of time that one hires out the vehicles for.
Long term hires B2B may be taxed in the place of
business customer and B2C may be taxed in the place
of the supplier
For short term hires the place of supply is where the
vehicle is physically given over to the customer.
A means of transport is something that can actually be
used for transporting passengers or goods, and includes
road transport, caravans and trailers, motor cycles and
bicycles, ships, yachts, aircraft, and railway rolling stock.
It shouldn't include freight containers, static caravans or
racing cars.

Land and property services

If dealer is supplying services relating to land and
property, then the place of supply is always where the
land or property is located.
Land and property includes the land itself plus any
buildings or other structures, (including installations such
as oil production platforms). Machinery installed within a
building is not considered to be land or property.
Land and property services include:
construction, refurbishment, conversion, repair,
maintenance and demolition
professional services of estate agents, architects,
surveyors, etc
property management and maintenance services
Since the present design of GST does not include real
estate services, at least in the initial stages, these would
be relevant only when these services are covered

Physical performances
For performances the place of supply is always
where the performance takes place, irrespective
of where the customer or supplier is located.
These include services such as:
entertainment and cultural performances,
including sports events, before a live audience
services for exhibitions, conferences or meetings
support services relating to performances and
exhibitions, such as organising supplies and
services

Work carried out on goods

These Goods mean movable items, not
fixed installations. Work includes any kind
of physical service, including valuation,
processing, manufacturing, repairs and
maintenance, and alterations or finishing.
B2B transactions of the above is I the
place of the customer
For B2C transactions the place is where
the work is physically performed

Place of belonging
If dealer is in a particular State and the place of supply
of the dealers service is in that State, He should
charge and account for GST according to SGST rules.
Dealer belongs in a particular State if:
A business establishment ( head office or only office) is
in that State, and the dealer has no fixed establishments
(branch offices or agencies) in other States
Dealers business establishment is in a particular State
and Dealer has fixed establishments in other States, but
that particular States office is the one mainly concerned
with supplying services

Place of belonging
Dealers business establishment is not in that State but
the dealer has a fixed establishment in that State which
is the one from which the dealer supplies services
Dealer doesn't have either a business or fixed
establishment in that particular State or elsewhere, but
his business is a corporate body (eg, a limited company)
which is registered in that State
Dealer doesn't have a business or a fixed establishment
in that particular State, or anywhere else, but that State
is his usual place of residence
A business can have only one business establishment,
but can have several fixed establishments.

Place of belonging
If a dealer has a business establishment in a
particular State and establishments in other
States, he needs to look at what each
establishment does in terms of supplying
services. If, for example, his company has its
head office in the particular State, but has a
subsidiary that supplies services to local
businesses, then that company belongs in other
State for GST purposes. This is the case even if
the dealers head office belongs in the particular
State for supplies that it makes in the particular
State.

Thank you