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 Services-telecommunication

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 Services-Telecommunication

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 computer-

related service or Internet access made by a particular supplier, and the recipient acquires the supply under an agreement with either the supplier or anothersupplier, 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 determinethat 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

Place of SupplyHow to work out place of supply of services for GSTPlace of Supply-meaningDifficulty in deciding place of SupplyWhich GST rules to use when charging GST on servicesHow to charge and account for GST on the goods or services suppliedSpecific services-Immovable PropertySpecific Services-telecommunicationSpecific Services-TelecommunicationElectronically supplied servicesElectronically supplied servicesElectronically supplied servicesBanking and other Financial ServicesBanking and other Financial ServicesWorking out the place of supply-Hiring out TransportLand and property services Physical performancesWork carried out on goodsPlace of belongingPlace of belongingPlace of belongingThank you