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GST is a destination based tax, i.e., the goods/services will be taxed at the place where they are consumed and not at the origin. So, the state where they are consumed will have the right to collect GST.
Therefore, place of supply is crucial under GST as all the provisions of GST revolve around it. Place of supply of goods under GST defines whether the transaction will be counted as intrastate or interstate, and accordingly, levy of SGST, CGST & IGST will be determined.
Hence, it is recommended to cross-check the place of the supplier, using theGST search tool.
|Supply Type||Place of supply|
|Involves movement of goods, whether by supplier, or buyer or by any other person||Location of the goods when the movement of goods terminates for delivery to the recipient.|
|Goods are delivered by the seller to the buyer on the directions of a third party (whether or not an agent), before or during the movement of goods, by the way of transfer of title in goods or the documents or some other way||It is assumed that the third person has received the goods and therefore, the place of supply of the goods will be the principal place of business of the third party.|
Example 1- Intra-state sales Mr. Raj of Mumbai, Maharashtra sells 10 TV sets to Mr. Vijay of Nagpur, Maharashtra
The place of supply is Nagpur in Maharashtra. Since it is the same state CGST & SGST will be charged.
Example 2-Inter-State sales Mr. Raj of Mumbai, Maharashtra sells 30 TV sets to Mr. Vinod of Bangalore, Karnataka
The place of supply is Bangalore in Karnataka. Since it is a different state IGST will be charged.
Example 3- Deliver to a 3rd party as per instructions Anand in Lucknow buys goods from Mr. Raj in Mumbai (Maharashtra). The buyer requests the seller to send the goods to Nagpur (Maharashtra)
In this case, it will be assumed that the buyer in Lucknow has received the goods & IGST will be charged. Place of supply: Lucknow (UP) GST: IGST
Example 4- Receiver takes the goods from the ex-factory. Mr. Raj of Mumbai, Maharashtra gets an order of 100 TV sets from Sales Heaven Ltd. of Chennai, Tamil Nadu. Sales Heaven mentions that it will arrange its own transportation and take TV sets from Mr. Raj ex-factory
Place of supply: Chennai, Tamil Nadu GST: IGST Although the goods are received ex-factory i.e in Maharashtra by the recipient, the movement of the goods terminates for delivery to the recipient only at Chennai, Tamil Nadu.
Irrespective of whether the supplier or the recipient is actually undertaking the movement of goods, the place of supply is the location of goods where movement of goods terminates for delivery to the recipient which is at Chennai. Hence, IGST is applicable.
Example 5 – E-commerce sale Mr. Raj of Mumbai, Maharashtra orders a mobile from Amazon to be delivered to his mother in Lucknow (UP) as a gift. M/s ABC (online seller registered in Gujarat) processes the order and sends the mobile accordingly and Mr. Raj is billed by Amazon.
Similar to example 3, it will be assumed that the buyer in Mumbai has received the goods & IGST will be charged. Place of supply: Mumbai, Maharashtra GST: IGST
|Supply Type||Place of Supply|
|No movement of goods, either by the supplier or by the recipient||Location of those goods at the time of delivery to the recipient (at the time of ownership transfer)|
|Goods are assembled or installed at site||Place of installation or assembly|
Example 1- No movement of goods Sales Heaven Ltd. (Chennai) opens a new showroom in Bangalore. It purchases a building for showroom from ABC Realtors (Bangalore) along with pre-installed workstations
Place of supply: Bangalore GST: CGST & SGST There is no movement of goods (work stations), so the place of supply will be the location of such goods at the time of delivery (handing over) to the receiver.
Note: There is no GST on purchase of building or part thereof. RENT of commercial space attracts GST
Example 2- Installing goods Strong Iron & Steel Ltd. (Jharkhand) asks M/s SAAS Constructions (West Bengal) to build a blast furnace in their Jharkhand steel plant
Place of supply: Jharkhand GST: CGST & SGST Although M/s SAAS is in West Bengal, the goods (blast furnace) is being installed at site in Jharkhand which will be the place of supply.
Note: M/s SAAS will have to be registered in Jharkhand to take up this contract. They can opt to register as a casual taxable person which will be valid for 90 days (extendable by 90 days more, on the basis of a reasonable cause).
|Particulars||Location of the supplier||Location of the recipient ( Registered office)||Site of the assembly /installation||Place of supply||GST|
Goods are assembled or installed at site
|Jharkhand||Jharkhand||Tamil Nadu||Tamil Nadu||CGST+SGST
|Supply Type||Place of Supply|
|Goods are on board of a conveyance or vessel or train or aircraft or a motor vehicle||Location at which such goods are taken on board.|
Example 1- Plane Mr. Ajay is travelling from Mumbai to Delhi by air. He purchases coffee and snacks while on the plane. The airline is registered in both Mumbai and Delhi.
Place of supply: Mumbai GST: CGST & SGST The food items were loaded into the plane at Mumbai. So, the place of supply becomes Mumbai.
Example 2- Plane- Business travel Mr. Ajay is travelling from Mumbai to Chennai by air on behalf of his company Ram Gopal and Sons (registered in Bangalore). In the plane he purchases lunch. The airline is registered in Mumbai & Chennai.
Place of supply: Mumbai GST: CGST & SGST The food items were loaded into the plane at Mumbai. So, the place of supply becomes Mumbai. It does not matter where the buyer is registered.
In most cases CGST & SGST is charged because most airlines have a pan-India presence and will be registered in all states.
Example 3- Train Mr. Vinod is travelling to Mumbai via train. The train starts at Delhi and stops at certain stations before Mumbai. Vinod boards the train at Vadodara (Gujarat) and promptly purchases lunch on board. The lunch had been boarded in Delhi.
Place of supply: Delhi GST: CGST & UTGST The food items were loaded into the train at Delhi. So, the place of supply becomes Delhi.
CGST & SGST is charged because Indian railways has a pan-India presence and will be registered in all states. It does not matter where the buyer is registered.
Where the place of supply cannot be determined for any reason, the place of supply shall be determined by the Parliament rules based on the recommendations made by the GST Council.
The place of supply of goods:
|Supply Type||Place of Supply||GST|
|Goods imported into India||Location of the importer||Always IGST is charged for imports|
|Exported from India||Location outside India||GST on exports are eligible for refund|
Also, whenever an Indian entity raises an invoice in foreign currency, it can charge GST in foreign currency. However, you have to show the INR conversion rate and the INR values.
Suppose you have raised in US Dollars (USD), then you can charge GST in USD. Also, you have to show the USD to INR conversion ratio and invoice values in INR.
Example 1- Import
Ms. Malini imports school bags from China for her shop (registered in Mumbai)
Place of supply: Mumbai GST: IGST
Example 2- Export
Ms. Anita (Kolkata) exports Indian perfumes to UK
Place of supply: Kolkata GST: Exempted
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 ClearOne software to generate sales invoices. Based on your 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.