How to Identify Place of Supply Under GST?

With the dawn of 01st July, 2017, India witnessed one of the biggest changes in its indirect taxation structure after independence i.e. Goods & services tax. GST is a destination-based tax which implies that goods & services will be taxed at the place of consumption. Therefore under GST, the state where the goods & services are supplied or finally consumed will have to right to collect GST.

But one of the contentious issue still remains, that how should we identify the place of supply under GST correctly?

Broadly under GST there are two (2) places of supplies under GST and accordingly CGST, SGST or IGST are being levied.

1. INTRA-STATE SUPPLY

Section (8) of IGST Act, deals with Intra-state supply of goods & service. It can be defined as a supply in which the actual location of the supplier and the supply of goods/services are the same state or UT.

2. INTER-STATE SUPPLY

Section (7) of the IGST acts deals with the following supplies which shall be treated as Inter-state supply under GST. It can be defined as a supply in which the location of supplier and place of supply are in different states/UT or in one state and UT. Certain other conditions in which the nature of supply would be Inter-state are:

• Supplies to international tourists
• Import & export of goods & services
• Supply to or by Special economic zones (SEZ)
• Supplies of goods & services imported into India.
• Other supply in the taxable territory which is covered under Intra-state supply.

What are the rules to identify place of supply under GST?

Rules for place of supply under GST have been framed by keeping in consideration the Destination based tax principle. According to this rule the place of supply is being identified as per the provisions mentioned above and accordingly GST rates are being put forward. So the place of supply is based on the place of consumption of goods & service.

Since Goods are tangible therefore it becomes easy to identify where the actual place of consumption based on Consumption principle is.

Problem arises when we have to identify the place of consumption for services. Since Services are intangible, therefore it becomes a bit difficult to identify the exact place for consumption of services. With the help of reference table mentioned below one could easily identify place of supply for services:

Immovable Property (Hotel accommodation)	Location at which the immovable property is located
Restaurant, Gym, Grooming	Location where services are actually performed
Transportation of Goods	B2B: Location of registered person B2C: Location at which goods are actually delivered
Banking & financial service	Location of recipient (if available) or else; Location of the supplier

Default rule which is applicable in case of identifying place for supply of services is:

• B2B: Location of registered person
• B2C: Location of recipient (if available) or else; Location of the supplier.

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