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How to Determine Place Of Supply of Service Under GST

By Annapoorna

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Updated on: Feb 7th, 2023

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7 min read

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.

However, there are specific cases/rules for determining the place of supply for services rendered directly in relation to immovable property, transportation of goods, and many more specific services.

Latest Update

Budget 2023 update (to be notified)
Section 12(8) is amended (proviso is removed) to fix the place of supply where both the services provider and recipient are in India, irrespective of destination of goods.

Importance of Place of Supply

Let us first understand why an accurate determination of place of supply is important for businesses. The reasons for this are listed below:

  • Wrong classification of supply between interstate or intra-state and vice-versa may lead to hardship to the taxpayer as per section 19 of IGST Act and section 70 of CGST Act
  • Where wrong taxes have been paid on the basis of the wrong classification, a refund will have to be claimed by the taxpayer
  • The taxpayer will have to pay the correct tax along with interest for the delay on the basis of revised/correct classification
  • Also, correct determination of place of supply will help us in knowing the incidence of tax. As if the place of supply is determined as a place outside India, then tax will not have to be paid on that transaction

Determining The Place Of Supply Of Services

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:

  • Location of the recipient of services
  • Location of the supplier of services

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:

Location of the Recipient of Services

S.NoCaseLocation of Recipient of Service
Awhere a supply is received at a place of business for which the registration has been obtainedsuch place of business
Bwhere 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
Cwhere a supply is received at more than one establishment, whether the place of business or fixed establishmentthe location of the establishment most directly concerned with the receipt of the supply
Din absence of such placesthe location of the usual place of residence of the recipient;

Location of the provider/supplier of services

S.NoCaseLocation of Supplier of Services
Awhere a supply is made from a place of business for which the registration has been obtainedthe location of such place of business
Bwhere 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;
Cwhere 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
Din 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:
 

Domestic Transactions

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:

  • Inter-State (i.e between two different states)
  • Intra-State (i.e within the same state)

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:

  • Location of the service recipient (if the address is available on record);
  • Otherwise, the location of the service provider

International Transactions

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:

  • The location of the service recipient
  • In the case where the location of the service recipient is not available, the place of supply shall be the location of the supplier.
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About the Author

I preach the words, “Learning never exhausts the mind.” An aspiring CA and a passionate content writer having 4+ years of hands-on experience in deciphering jargon in Indian GST, Income Tax, off late also into the much larger Indian finance ecosystem, I love curating content in various forms to the interest of tax professionals, and enterprises, both big and small. While not writing, you can catch me singing Shāstriya Sangeetha and tuning my violin ;). Read more

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Quick Summary

Under GST, the place of supply for services is crucial for correct tax determination. It is vital for businesses to avoid classification errors and ensure proper tax payment. Place of supply depends on the location of the service provider and recipient. Domestic transactions are categorized as inter-state and intra-state. For international transactions, the place of supply is determined by the location of the service recipient.

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