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Under the Goods and Services Tax (‘GST’) Law, the taxpayer is liable to pay tax at the time and as per the place of supply. The place of supply is the place of consumption of services.
Provisions regarding ‘Place of supply’ are explained under the IGST Act. ‘Place of Supply of Goods under GST’ is discussed separately in our article. This article will focus on the place of supply of services in general.
Let us first understand why an accurate determination of place of supply is important for businesses. The reasons for this are listed below:
GST is destination-based tax i.e consumption tax, which means tax will be levied where goods and services are consumed and will accrue to that state. Under GST, there are three levels of Tax, IGST, CGST & SGST and based on the ‘’place of supply’’ so determined and the location of the supplier, the respective tax will be levied.
IGST is levied where the transaction is inter-state, and CGST & SGST are levied where the transaction is intra-state. For understanding the place of supply for services, the following two concepts are very important namely:
Let’s understand these two concepts in detail as they will form the base for determining the place of supply in case of the supply of services:
|S.No||Case||Location of Recipient of Service|
|A||where a supply is received at a place of business for which the registration has been obtained||such place of business|
|B||where a supply is received at a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere)||such fixed establishment|
|C||where a supply is received at more than one establishment, whether the place of business or fixed establishment||the location of the establishment most directly concerned with the receipt of the supply|
|D||in absence of such places||the location of the usual place of residence of the recipient;|
|S.No||Case||Location of Supplier of Services|
|A||where a supply is made from a place of business for which the registration has been obtained||the location of such place of business|
|B||where a supply is made from a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere)||the location of such fixed establishment;|
|C||where a supply is made from more than one establishment, whether the place of business or fixed establishment,||the location of the establishment most directly concerned with the provision of the supply|
|D||in absence of such places,||the location of the usual place of residence of the supplier;|
The transactions in terms of supply of services can be broadly categorized as below:
These are the transactions where both the parties i.e the supplier as well as the recipient of service are in India. Domestic transactions can be further categorised as below:
General Rule: In general, the place of supply for services will be the location of the service recipient (the recipient needs to be a registered person).
In cases, where service is provided to an unregistered person, the place of supply will be the:
These are the transactions where either the service recipient or the provider is outside India. Transactions in which both the recipient as well as a provider are outside India are not covered here.
General Rule: The Place of supply for services treated as international transactions shall be: