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Place Of Supply of Service Under GST

In the previous article, we discussed the place of supply of goods under GST. However, in this one, we will discuss the concept of the place of supply of service under GST

Importance of Determining the correct Place of Supply

Before we start, it is important to know why ascertaining the accurate place of supply is important. Here are some of the reasons for it:

  1. The wrong classification of the place of supply will lead to a wrong payment of taxes IGST in place of CGST and SGST or UTGST and vice-versa.
  2. The taxpayer has to claim a refund for such a wrong classification of taxes.
  3. The correct place of supply helps in determining the accurate incidence of tax.

Ascertaining the Place of Supply of Services

As we know, GST is a consumption-based tax as GST is levied to that place where the services are consumed. In other words, the place of supply of services plays a major role in determining the correct tax incidence. Here are the two important concepts under GST that act as a base for determining the place of supply for services:

a) Location of the supplier of services

b) Location of the recipient of services

 

a) Location of the Supplier of Services:

S.No Scenarios Location of the supplier of services
1 In a case when Supply is made from the registered place of business Location of such place of business.
2 If supply made from any other registered establishment other than the place of business Location of such fixed establishment.
3 In a case when the supply is made from more than one establishment The location of such an establishment which is directly related to the provision of such supply.
4 In a case when supply is made without any registered place of business or establishment The location will be the place of residence of the supplier.

b) Location of the Recipient of Services:

S.No Scenarios Location of the recipient of services
1 In a case when Supply is received at the registered place of business Location of such place of business.
2 If supply is received at any other registered establishment other than the place of business Location of such fixed establishment.
3 In a case when the supply is received at more than one establishment The location of such an establishment which is directly related to the provision of such supply.
4 In a case when there is no registered  place of business or establishment In such a case, the location will be the place of residence of the recipient.

Types of Transactions

There are two broad types of transaction for the supply of services:

1. Local Transactions

Local transactions or the domestic transaction is a type of transaction where both the supplier and recipient are from India. This transaction can be bifurcated further into two

Inter-State Transaction: Any transaction that takes place between two different states such as Delhi and Mumbai.

Intra-State Transaction: Any transactions that take place in the same state.

General Rule regarding the Place of supply for such services

As per Section 12(2) of the IGST Act, the place of supply of such services shall be the location of the recipient (where such recipient is registered under GST).

However, there are certain cases when the services are supplied to the unregistered recipient. In such cases the place of supply of services shall be either;

i) The location of the unregistered recipient where the address of such recipient exists in the records of the supplier; OR

ii) The location of the supplier in all other cases.

2. International Transactions

International transactions are those transactions where either the service provider or the recipient is situated outside India.

General Rule regarding the Place of supply for such services

As per section 13(3) of the IGST Act, the Place of Supply for such services shall be the place where the services are performed.