In this article, we will discuss the place of supply in cases of import/export along with numerous examples.
Basics of GST on Imports
As a basic principle, GST law says that all supplies of goods & services made as imports into India will be treated as an inter-state supply. All inter-state supplies attract IGST. So import of goods and services into India will attract IGST. Basic custom duty and all applicable customs levy will continue to be charged.
- IGST on import of goods will be levied and collected under the Customs Act, 1962.
- IGST on import of services will be covered under the IGST Act.
The IGST paid on imports will be available as input tax credit to the importer. This can be set off against the GST outgo on supplies made by the importer.
Understanding Place of Supply of Imports
Place of supply of any goods imported into India is the location of the importer. Therefore, if an importer is located in the state of Karnataka, the state’s share of IGST will go to Karnataka.
Place of supply for import/export of goods
Example 1- Import
Ms. Malini imports school bags from China for her shop (registered in Mumbai).
Place of supply: Mumbai
Example 2- Export
Ms. Anita (Kolkata) exports Indian perfumes to UK.
Place of supply: UK
Place of supply of import/export of services
***If the location of the recipient is not available then the place of supply shall be the location of the service provider.
Import/export of specific services
Note: For the above services, if any service is supplied at more than one location and even if one of them is a taxable territory then the place of supply will be the location in the taxable territory.
For example, if a service is provided in Singapore and India then the place of supply will be India and GST will be applicable.
If the above services are supplied in more than one State then all the states will be considered as the place of supplies. The states will share GST in proportion to the value of services.
Remember: In case of import of services, you (the recipient) must pay GST under reverse charge.
Example 1- Mr. Tom from London visits Mumbai and visits HSBC Mumbai branch.
Place of supply: Mumbai
Example 2- British Airways flies passengers from Mumbai to New York via London. Mr. Ajay is travelling from Mumbai to New York.
Place of supply: Mumbai (Place where the passenger embarks on the conveyance for a continuous journey)
In respect of import of online information and database access or retrieval services (OIDAR) by unregistered, non-taxable recipients, the supplier located outside India will be responsible for payment of taxes.
Either he will have to take registration or he will have to appoint a person in India to pay GST.
Please refer our article on place of supply of OIDAR.
Sale to SEZ units
Supply of goods or services or both to a SEZ developer or SEZ unit will be treated as inter-state supply and IGST will be applicable.
How our software can help you?
ClearTax GST Software will make your life much easier. For your sales invoices, you do not have to calculate the place of supply each and every time.
All you need to do you see enter the details of your buyer in the contacts master. You can use ClearTax Bill Book to generate sales invoices. Based on you buyer’s and your GSTIN the software will automatically calculate the place of supply according to the provisions and inform you whether you will charge CGST/SGST or IGST.
For your purchases invoices, all you need to do is upload the excel copy of your purchase invoices. The software will do the rest.
We have an entire series of articles on place of supply-
- Place of supply of goods
- Place of supply of general services
- Place of supply for specific services
- Place of services related to immovable property
- Place of supply for transportation services
- Place of supply for telecommunication services
- Place of supply for banking services
- Place of supply of import of services
- Place of supply for online information and database access or retrieval services