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Place of Supply

Last updated on 10 May, 2018

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What is the place of supply under GST?

The place of supply for a GST transaction is the location of the person receiving the goods or services.

Why is the place of supply important?

The place of supply determines whether a transaction is intra-state, inter-state, or import-export. This in turn determines which taxes apply: a combination of central (CGST) and state (SGST) taxes, or an integrated tax (IGST), with or without additional duties.

Determining the place of supply for a particular transaction

There are two locations that are important for determining a transaction’s tax liability under GST, and both are listed on the tax invoice. They are: 

Place of supply for goods under different scenarios

Place of supply for services under different scenarios

General rules
Place of supply for certain services is not covered under general rules
Service Place of Supply
Services related to immovable property (like construction, interior decoration or repair of houses, offices, house boats, etc. Also includes services related to events held at these places) Location of the property.
Event based admission services (artistic, educational, entertainment, etc., including theatres and theme parks.) Location where the event takes place.
Services related to organisation and management of events. For B to B transactions: Location of the recipient. For B to C transactions: Location where the event is held.
Goods transport services. For B to B transactions: Location of the recipient. For B to C transactions: Location where the goods are delivered.
Passenger transport services. For B to B transactions: Location of the recipient. For B to C transactions: Location where the passenger got onboard the vehicle.
Conveyance services (air, road, rail or sea). First point where the journey begins.
Telecommunication and media services. Fixed line, dish antennas & leased internet circuits: Location where these entities have been installed. Post Paid communication: Address of the recipient. Pre-paid communication: Location of the selling agent or the place where payment vouchers are collected for the same. For all other cases: Location of the recipient or the supplier (when recipient information is unavailable).
Banking, stock brokering and other financial services. Location of the recipient or the location of the supplier (when recipient information is unavailable).
Insurance services. Location of the recipient/address of the recipient on the invoice(s).
Place of supply for import and export of services from/to a location outside India

Impact of the place of supply on your taxable transactions

If the location of supplier and the place of supply are in the same state, then the sale is an intra-state transaction and will incur both CGST and SGST. 

For example, if a registered supplier in Madhya Pradesh delivers their goods or services to a buyer who is also in Madhya Pradesh, then it is an intra-state transaction and the buyer must pay a combination of CGST and SGST. 

If the supplier is in a different state from the buyer, then the sale is an inter-state transaction and will incur IGST. 

For example, if a registered supplier in Madhya Pradesh delivers their goods or services to a buyer who is located in Karnataka, then it is an inter-state transaction and the buyer must pay IGST. 

If either the buyer or the seller is a foreign party, the transaction is treated as an import or export depending on the case. That said, imports and exports are also treated similar to an inter-state supply (in terms of place of supply and taxation) and will incur IGST. There are special circumstances if the seller is a foreign party who is related to the buyer — as long as the goods are only for the buyer’s consumption and not for resale, the transaction won’t incur GST.

Note:

You can find more details about interstate supply under GST in Article 269A of the GST Law. You can also refer to the IGST law from here that talks about place of supply in detail.



       
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