Place of Supply Under GST – Complete Guide
One of the most important
concepts under the Goods and Services Tax (GST) is the Place of Supply (POS).
It determines where a transaction is considered to have taken place and
consequently which tax—CGST & SGST or IGST—will be levied.
Even if a supplier is registered
in one State and the customer belongs to another, GST liability cannot be
determined merely by looking at their locations. The law first requires
determination of the Place of Supply under the Integrated Goods and
Services Tax (IGST) Act, 2017.
Understanding the Place of Supply
provisions is essential for:
- Businesses making interstate transactions
- Service providers operating across India
- E-commerce operators
- Importers and exporters
- Chartered Accountants, GST Practitioners and Tax
Professionals
- Students preparing for CA, CMA, CS and GST
examinations
This Blog explains the complete concept of Place of Supply along with practical illustrations.
What is Place of Supply?
Place of Supply refers to
the location where goods or services are deemed to be supplied or consumed
for GST purposes.
It is the deciding factor for
determining whether a supply is:
- Inter-State Supply (IGST applicable), or
- Intra-State Supply (CGST + SGST applicable).
Without determining the Place of
Supply, the correct GST cannot be charged.
Why is Place of Supply Important?
The Place of Supply provisions
help determine:
- Which State receives the GST revenue.
- Whether IGST or CGST & SGST is payable.
- The jurisdiction of taxation.
- Compliance for interstate and intrastate
transactions.
- Correct filing of GST returns.
- Avoidance of double taxation and disputes.
Nature of Supply Under GST
GST classifies every supply into
two categories:
1. Intra-State Supply
When the location of the
supplier and the Place of Supply are in the same State or Union
Territory, the transaction is treated as an Intra-State Supply.
Taxes Levied:
- CGST
- SGST (or UTGST)
Example
ABC Traders, Kolkata, sells goods
to a customer in Kolkata.
- Supplier Location: West Bengal
- Place of Supply: West Bengal
GST Applicable:
- CGST
- SGST
2. Inter-State Supply
When the supplier and the Place
of Supply are in different States or Union Territories, the transaction
is treated as an Inter-State Supply.
Tax Levied:
- IGST
Example
ABC Traders, Kolkata, supplies
goods to a customer in Ranchi.
- Supplier Location: West Bengal
- Place of Supply: Jharkhand
GST Applicable:
- IGST
Understanding Origin of Supply
According to the Blog, the Origin
of Supply is generally determined from the supplier's location, which may
be:
- Head Office
- Branch Office
- The office most directly connected with the supply
- Residence (in certain cases)
The origin helps identify the
supplier's location, which is then compared with the Place of Supply to
determine the nature of the transaction.
Destination or Place of Supply
GST follows the destination-based
taxation principle, meaning tax revenue belongs to the State where goods or
services are ultimately consumed.
The Place of Supply provisions
differ depending on the nature of the supply:
|
Nature of Supply |
Relevant Section |
|
Domestic
Supply of Goods |
Section 10 |
|
Import/Export
of Goods |
Section 11 |
|
Domestic
Supply of Services |
Section 12 |
|
International
Supply of Services |
Section 13 |
|
OIDAR
Services |
Section 14 |
|
Specified
Actionable Claims |
Section 14A |
Section 7 – Inter-State Supply Under GST (Complete Guide with Practical Examples)
One of the most fundamental
concepts under the Goods and Services Tax (GST) is determining whether a
transaction is an Inter-State Supply or an Intra-State Supply.
This classification is important because it decides whether Integrated Goods
and Services Tax (IGST) or Central GST (CGST) and State GST (SGST/UTGST)
will be charged.
The provisions relating to Inter-State
Supply are contained in Section 7 of the Integrated Goods and Services
Tax (IGST) Act, 2017. This section specifies the circumstances in which the
movement of goods or services between different States, Union Territories, or
across international borders is treated as an Inter-State Supply.
A proper understanding of Section
7 helps businesses issue correct tax invoices, charge the appropriate GST,
claim Input Tax Credit (ITC), and remain compliant with GST law.
What is Inter-State Supply?
An Inter-State Supply is a
supply where the location of the supplier and the Place of Supply
are situated in different States, different Union Territories, or between a
State and a Union Territory.
In such cases, Integrated
Goods and Services Tax (IGST) is levied instead of CGST and SGST.
Example
A registered dealer in West
Bengal sells goods to a customer in Jharkhand.
- Supplier Location: West Bengal
- Place of Supply: Jharkhand
Since both locations are in
different States, the transaction is treated as an Inter-State Supply,
and IGST is applicable.
Legal Provision – Section 7 of the IGST Act
Section 7 of the IGST Act
specifies various situations where a supply is regarded as an Inter-State
Supply. These provisions cover supplies of goods, services, imports, exports,
and certain special transactions.
1. Inter-State Supply of Goods
A supply of goods is treated as
an Inter-State Supply when the location of the supplier and the Place
of Supply are situated in:
- Two different States;
- Two different Union Territories; or
- A State and a Union Territory.
Whenever the supplier and the
Place of Supply are in different jurisdictions, IGST is payable.
Example 1
A manufacturer in Maharashtra
sells machinery to a customer in Karnataka.
- Supplier: Maharashtra
- Place of Supply: Karnataka
Nature of Supply:
Inter-State Supply
GST Applicable: IGST
Example 2
A dealer in Delhi supplies
electronic goods to a customer in Chandigarh (UT).
Since the supplier and Place of
Supply are in different jurisdictions, the transaction qualifies as an Inter-State
Supply.
2. Inter-State Supply of
Services
Services are treated as an Inter-State
Supply when the location of the supplier and the Place of Supply
are situated in different States or Union Territories.
Example
A Chartered Accountant in Kolkata
provides GST consultancy to a registered company located in Bengaluru.
- Supplier: West Bengal
- Place of Supply: Karnataka
The transaction is an Inter-State
Supply, and IGST is applicable.
Practical Examples
- Software development services provided from Pune to
a client in Chennai.
- Legal consultancy rendered from Jaipur to a company
in Hyderabad.
- Management consultancy from Delhi to a business in
Kochi.
All these transactions are liable
to IGST because the supplier and the Place of Supply are located in different
States.
3. Import of Goods
Section 7 specifically provides
that every import of goods into India is treated as an Inter-State Supply.
Accordingly, IGST is levied
on imported goods in addition to applicable customs duties.
Example
ABC Industries in Gujarat imports
industrial machinery from Germany.
- Supplier: Germany
- Importer: Gujarat
The import is treated as an Inter-State
Supply, and IGST is payable at the time of customs clearance.
4. Import of Services
Import of services is also
treated as an Inter-State Supply under Section 7.
Example
An Indian company receives cloud
computing services from a software company located in the United States.
- Supplier: USA
- Recipient: India
The transaction is treated as an Inter-State
Supply, and GST implications are determined under the applicable provisions
relating to imported services.
5. Export of Goods and
Services
Where the supplier is located
in India and the Place of Supply is outside India, the transaction
is treated as an Inter-State Supply, subject to the conditions
applicable to exports.
Exports are treated as Zero-Rated
Supplies under the GST law, allowing exporters to avail themselves of the
benefits available under the IGST Act.
Example
A textile manufacturer in Surat
exports garments to a customer in the United Kingdom.
- Supplier: Gujarat
- Place of Supply: Outside India
The supply is treated as an Inter-State
Supply and qualifies as an export subject to the prescribed conditions.
Special Cases Treated as Inter-State Supply
In certain situations, the GST
law treats a supply as an Inter-State Supply even if both parties appear
to be located in the same State.
1. Supply To or By a Special
Economic Zone (SEZ)
Any supply to or by
a Special Economic Zone (SEZ) Developer or SEZ Unit is always
regarded as an Inter-State Supply, irrespective of the physical location
of the supplier and recipient.
This special provision promotes
exports and ensures uniform taxation for SEZ transactions.
Example
A company located in Ahmedabad,
Gujarat supplies machinery to an SEZ Unit situated in Gujarat.
Although both the supplier and
recipient are located within Gujarat, the transaction is treated as an Inter-State
Supply, and IGST is applicable.
Additional Example
A software company operating from
an SEZ in Telangana provides software development services to a customer
located in Hyderabad.
Since one of the parties is an
SEZ Unit, the transaction is considered an Inter-State Supply.
2. Supply to a Tourist
Goods supplied to a tourist who
is eligible to claim a GST refund at an international airport are treated as Inter-State
Supplies.
This provision supports the
tourist refund mechanism and aligns with the destination-based nature of GST.
Example
A foreign tourist purchases
handicrafts from a registered dealer in Jaipur before leaving India and claims
the eligible GST refund at the international airport.
Although the sale occurs within
Rajasthan, it is treated as an Inter-State Supply under the GST law.
Why Section 7 is Important?
Correct identification of an Inter-State Supply helps
businesses:
- Charge
the correct GST (IGST).
- Avoid
incorrect tax payments.
- Prevent
denial of Input Tax Credit.
- Ensure
proper GST return filing.
- Comply
with the IGST Act.
Difference Between Inter-State and Intra-State Supply
|
Particulars |
Inter-State Supply |
Intra-State Supply |
|
Supplier and
Place of Supply |
Different
States/UTs |
Same State/UT |
|
Tax
Applicable |
IGST |
CGST +
SGST/UTGST |
|
Governing
Provision |
Section 7 of
the IGST Act |
Section 8 of
the IGST Act |
- Section 7 governs Inter-State Supplies under the IGST Act.
- Different States, different Union Territories, or a State and a Union Territory result in an Inter-State Supply.
- Every import of goods is treated as an Inter-State Supply.
- Every import of services is treated as an Inter-State Supply.
- Exports are treated as Inter-State Supplies and qualify as Zero-Rated Supplies, subject to the prescribed conditions.
- Supplies to or by SEZ Units/Developers are always Inter-State Supplies.
- Supplies made to eligible tourists claiming GST refunds are also treated as Inter-State Supplies.
Section 8 – Intra-State Supply Under GST (Complete Guide with Practical Examples)
After understanding Inter-State
Supply under Section 7 of the IGST Act, it is equally important to
understand the concept of Intra-State Supply. The classification of a
transaction as an Intra-State Supply determines whether Central Goods and
Services Tax (CGST) and State Goods and Services Tax (SGST) or Union
Territory Goods and Services Tax (UTGST) are applicable.
Section 8 of the Integrated
Goods and Services Tax (IGST) Act, 2017 lays down the provisions for
identifying an Intra-State Supply of goods and services. Although the basic
rule appears simple, certain transactions are specifically excluded from the
scope of Intra-State Supply, even when both the supplier and the recipient are
located in the same State.
Understanding these provisions is
essential for businesses to charge the correct GST, claim Input Tax Credit
(ITC), and comply with GST law.
What is Intra-State Supply?
An Intra-State Supply is a
supply where the location of the supplier and the Place of Supply
are situated in the same State or the same Union Territory.
In such cases, GST is divided
into two equal parts:
- CGST (Central Goods and Services Tax)
- SGST (State Goods and Services Tax)
Where the supply takes place in a
Union Territory without a legislature, UTGST is levied instead of SGST.
Legal Provision – Section 8 of the IGST Act
According to Section 8 of the
IGST Act, 2017, a supply of goods or services is treated as an Intra-State
Supply when:
- The location of the supplier and
- The Place of Supply
are located in the same State
or the same Union Territory.
However, certain transactions are
specifically excluded from this definition and are treated as Inter-State
Supplies, even if both parties are located in the same State.
Conditions for Intra-State Supply
A transaction will qualify as an
Intra-State Supply only when all the following conditions are satisfied:
- The supplier is located in India.
- The Place of Supply is determined according to the
IGST Act.
- Both the supplier and the Place of Supply are in
the same State or Union Territory.
- The transaction is not covered under the exceptions
specified in Section 7.
Intra-State Supply of Goods
A supply of goods is treated as
an Intra-State Supply when:
- The supplier is located in the same State or Union
Territory as the Place of Supply.
Example 1
ABC Traders located in Kolkata
(West Bengal) sells furniture to a customer in Durgapur (West Bengal).
- Supplier Location: West Bengal
- Place of Supply: West Bengal
Nature of Supply:
Intra-State Supply
GST Applicable:
- CGST
- SGST
Example 2
A wholesaler in Lucknow
supplies electrical goods to a retailer in Kanpur.
Both locations are within Uttar
Pradesh.
Therefore,
Nature of Supply:
Intra-State Supply
CGST and SGST will be charged.
Intra-State Supply of Services
A service is treated as an
Intra-State Supply when:
- The supplier's location and
- The Place of Supply
are situated in the same State or
Union Territory.
Example
A Chartered Accountant in Jaipur
provides GST consultancy to a registered company located in Jodhpur.
Supplier Location: Rajasthan
Place of Supply: Rajasthan
Since both are in Rajasthan,
Nature of Supply:
Intra-State Supply
GST Applicable:
- CGST
- SGST
GST Applicable on Intra-State Supply
Unlike Inter-State Supply, where
only IGST is charged, Intra-State Supply attracts two taxes:
|
Tax |
Levied By |
|
CGST |
Central Government |
|
SGST |
State Government |
|
UTGST |
Union Territory Administration (where applicable) |
Generally, the GST rate is
equally divided between CGST and SGST.
Example
Suppose GST Rate = 18%
For an Intra-State Supply:
- CGST = 9%
- SGST = 9%
Total GST = 18%
Transactions Not Treated as Intra-State Supply
Even if the supplier and
recipient appear to be located in the same State, the following transactions
are not treated as Intra-State Supplies.
1. Supplies To or By SEZ Units
or Developers
Any supply to or by
a Special Economic Zone (SEZ) Developer or SEZ Unit is always
treated as an Inter-State Supply.
This rule applies irrespective of
the physical location of the supplier or recipient.
Example
ABC Ltd. located in Ahmedabad
supplies machinery to an SEZ Unit situated in Ahmedabad.
Although both parties are located
in Gujarat,
the transaction is not an
Intra-State Supply.
Instead,
Nature of Supply:
Inter-State Supply
GST Applicable: IGST
Why is this Exception
Provided?
SEZs are established to promote
exports and receive special tax treatment.
Therefore, every supply to or by
an SEZ is treated uniformly as an Inter-State Supply.
2. Supplies to Eligible
Tourists
Goods supplied to a tourist who
is eligible to claim a GST refund at an international airport are also not
treated as Intra-State Supplies.
Such transactions are
specifically treated as Inter-State Supplies.
Example
A foreign tourist purchases
handicrafts from a registered shop in Jaipur and later claims a GST refund at
the international airport.
Although the supplier and
purchaser are in Rajasthan,
the transaction is treated as an Inter-State
Supply.
IGST provisions apply.
Practical Examples
Example 1 – Sale Within the
Same State
A furniture dealer in Patna
sells office furniture to a company in Gaya.
Supplier: Bihar
Place of Supply: Bihar
GST Applicable:
- CGST
- SGST
Example 2 – Consultancy
Service
A management consultant in Mumbai
provides advisory services to a company in Pune.
Both are located in Maharashtra.
GST Applicable:
- CGST
- SGST
Example 3 – Supply to SEZ
A software company in Hyderabad
provides software services to an SEZ Unit situated in Hyderabad.
Although both parties are in
Telangana,
the supply is treated as an Inter-State
Supply.
IGST will be charged.
Difference Between Inter-State and Intra-State Supply
|
Particulars |
Intra-State Supply |
Inter-State Supply |
|
Governing
Provision |
Section 8 of
IGST Act |
Section 7 of
IGST Act |
|
Supplier and
Place of Supply |
Same State/UT |
Different
States/UTs |
|
Tax
Applicable |
CGST +
SGST/UTGST |
IGST |
|
SEZ
Transactions |
Not covered |
Always
Inter-State |
|
Supply to
Eligible Tourists |
Not covered |
Treated as
Inter-State |
Why is Correct Classification Important?
Incorrect classification of a supply may result in:
- Charging
the wrong GST.
- Denial
of Input Tax Credit.
- Additional
tax liability.
- Interest
and penalties.
- GST
return mismatches.
- Unnecessary
litigation.
Therefore, businesses should always determine the Place of
Supply before issuing a tax invoice.
- Section 8 governs Intra-State Supplies under the IGST Act.
- The supplier's location and the Place of Supply must be in the same State or Union Territory.
- Intra-State Supplies attract CGST and SGST/UTGST.
- Supplies to or by SEZ Units/Developers are never treated as Intra-State Supplies.
- Supplies made to eligible tourists claiming GST refunds are also excluded from the scope of Intra-State Supply.
Section 9 – Supplies in Territorial Waters Under GST (Complete Guide with Practical Examples)
India has a vast coastline
extending over 7,500 kilometres, with numerous ports, offshore
installations, oil rigs, and marine activities. Many commercial transactions
take place in India's territorial waters, making it necessary to
determine the correct Place of Supply under GST.
To address this issue, Section
9 of the Integrated Goods and Services Tax (IGST) Act, 2017 provides a
special rule for supplies involving territorial waters. The provision ensures
that GST is correctly allocated to the appropriate State or Union Territory,
even when the supplier or the Place of Supply is located in the sea rather than
on land.
This special rule eliminates
uncertainty in determining the nature of supply and ensures smooth GST
compliance for businesses operating in offshore locations.
What are Territorial Waters?
Territorial waters refer to the maritime
area extending up to 12 nautical miles from the baseline of India's coastline,
over which India exercises sovereignty in accordance with international law.
Commercial activities in
territorial waters include:
- Offshore oil and gas exploration
- Marine construction
- Shipping and logistics
- Offshore drilling
- Port-related services
- Supply of goods to offshore installations
Since these locations are not
physically situated within any State, a specific GST provision is required to
determine the Place of Supply.
Legal Provision – Section 9 of the IGST Act
Section 9 provides that:
- Where the location of the supplier is in the
territorial waters, the supplier's location shall be deemed to be in
the nearest coastal State or Union Territory.
- Similarly, where the Place of Supply is in
the territorial waters, the Place of Supply shall also be deemed to be
in the nearest coastal State or Union Territory.
This legal fiction enables GST to
be administered as though the transaction occurred in the nearest coastal State
or Union Territory.
Why was Section 9 Introduced?
Without this provision, businesses operating in offshore
locations would face uncertainty regarding:
- Which
State has jurisdiction?
- Which
GST authority will administer the tax?
- Whether
the supply is Inter-State or Intra-State?
- Which
State should receive the GST revenue?
Section 9 removes this ambiguity by linking territorial
waters to the nearest coastal State or Union Territory.
Rule 1 – Supplier Located in Territorial Waters
Provision
If the supplier's location is situated in India's
territorial waters, it shall be deemed to be located in the nearest coastal
State or Union Territory.
Example
An offshore drilling company supplies equipment from an
installation located in the Arabian Sea nearest to the coast of Gujarat.
Although the supplier operates in territorial waters,
for GST purposes,
Supplier's Location = Gujarat
The transaction will be taxed accordingly.
Rule 2 – Place of Supply in Territorial Waters
Provision
If the Place of Supply is situated in India's
territorial waters, it shall also be deemed to be located in the nearest
coastal State or Union Territory.
Example
A company delivers machinery to an offshore oil platform
situated in India's territorial waters nearest to the coast of Andhra Pradesh.
For GST purposes,
Place of Supply = Andhra Pradesh
Practical Examples
Example 1 – Offshore Oil Rig
An engineering company located in Mumbai supplies spare
parts to an offshore oil rig situated in territorial waters nearest to the
Maharashtra coast.
- Supplier:
Maharashtra
- Place
of Supply: Maharashtra (deemed)
Nature of Supply: Intra-State Supply
GST Applicable:
- CGST
- SGST
Example 2 – Offshore Platform Near Gujarat
A company in Rajasthan supplies industrial equipment to an
offshore installation located in territorial waters nearest to Gujarat.
- Supplier:
Rajasthan
- Place
of Supply: Gujarat (deemed)
Since the supplier and Place of Supply are in different
States,
Nature of Supply: Inter-State Supply
GST Applicable:
- IGST
Example 3 – Marine Repair Services
A contractor from Chennai repairs equipment installed on a
vessel operating in territorial waters nearest to Tamil Nadu.
- Supplier:
Tamil Nadu
- Place
of Supply: Tamil Nadu (deemed)
Nature of Supply: Intra-State Supply
Why is the Nearest Coastal State Important?
The concept of the nearest coastal State or Union
Territory ensures that:
- GST
is collected by the appropriate tax authority.
- Jurisdictional
disputes are avoided.
- Offshore
businesses can comply with GST laws without ambiguity.
- The destination-based taxation principle is maintained.
Summary Table – Section 9
|
Situation |
GST Treatment |
|
Supplier
located in territorial waters |
Deemed to be
located in the nearest coastal State or Union Territory |
|
Place of
Supply in territorial waters |
Deemed to be
located in the nearest coastal State or Union Territory |
|
Purpose |
Determine
whether the supply is Inter-State or Intra-State and identify the correct GST
jurisdiction |
- Section 9 applies only to transactions involving India's territorial waters.
- If the supplier is located in territorial waters, the supplier's location is treated as the nearest coastal State or Union Territory.
- If the Place of Supply is in territorial waters, it is also deemed to be the nearest coastal State or Union Territory.
- The provision ensures proper GST administration and avoids jurisdictional disputes.
- After determining the deemed location, the normal rules of Sections 7 and 8 are applied to identify whether the transaction is an Inter-State or Intra-State Supply.
- GST is a destination-based tax, meaning tax is generally collected by the State where goods or services are consumed.
- Place of Supply is the key factor in determining whether IGST or CGST + SGST/UTGST is applicable.
- Different Place of Supply rules apply to:
- Goods
- Services
- Imports
- Exports
- Special transactions such as SEZ supplies and OIDAR services.
- Supplies to or by Special Economic Zones (SEZs) are always treated as Inter-State Supplies, irrespective of the supplier's or recipient's location.
- Where a transaction involves India's territorial waters, the supplier's location or the Place of Supply is deemed to be the nearest coastal State or Union Territory for GST purposes.
- Correct determination of the Place of Supply ensures proper tax compliance, accurate Input Tax Credit (ITC), and avoids disputes regarding GST jurisdiction.
Section 10 – Place of Supply of Goods Under GST (Domestic Transactions)
Section 10 of the Integrated
Goods and Services Tax (IGST) Act, 2017 lays down the rules for determining the
Place of Supply (POS) of goods when both the supplier and the recipient
are located in India. Determining the correct Place of Supply is essential
because it decides whether the transaction is an Inter-State Supply (liable
to IGST) or an Intra-State Supply (liable to CGST and SGST/UTGST).
In simple terms, Section 10
answers one important question:
"Where are the goods
considered to have been supplied for GST purposes?"
The answer depends on the nature
of the transaction, such as whether the goods are moved, installed, assembled,
or supplied on board a conveyance.
Applicability of Section 10
Section 10 applies only when:
- The
transaction is a domestic supply of goods.
- Both
the supplier and the recipient are located in India.
- The
supply is not an import or export transaction.
For import and export of goods, Section 11 of the
IGST Act applies.
Rules for Determining the Place of Supply of Goods
Section 10 contains different
rules depending on the type of transaction.
1. Where Movement of Goods is
Involved [Section 10(1)(a)]
Rule
When the supply involves the
movement of goods, the Place of Supply is the location where the movement of
goods ends for delivery to the recipient.
Practical Example 1
A manufacturer in Maharashtra
sells machinery to a customer in Karnataka.
- Supplier Location: Maharashtra
- Goods Delivered To: Karnataka
Place of Supply: Karnataka
Since the supplier and the Place
of Supply are in different States, it is an Inter-State Supply, and IGST
is applicable.
Practical Example 2
A dealer in Delhi supplies
furniture to a customer in Delhi, and the goods are delivered within
Delhi.
- Supplier Location: Delhi
- Place of Supply: Delhi
The transaction is an Intra-State
Supply, and CGST + SGST will be charged.
Key Point
It is the place where the
goods are finally delivered, not the place from where they are dispatched,
that determines the Place of Supply.
2. Bill-to Ship-to
Transactions [Section 10(1)(b)]
Meaning
A Bill-to Ship-to
transaction occurs when one person places an order and receives the invoice,
but the goods are delivered directly to another person on their instructions.
The GST law deems that the person
who gives the delivery instruction has received the goods. Therefore, the Place
of Supply is the location of the person who places the order (the
"Bill-to" party).
Example
ABC Ltd. (Delhi) places an order
with XYZ Ltd. (Gujarat) and instructs XYZ to deliver the goods directly to DEF
Ltd. (Rajasthan).
- Supplier: Gujarat
- Bill To: Delhi
- Ship To: Rajasthan
Place of Supply: Delhi
(Location of the Bill-to party)
The first supply (XYZ → ABC) is
determined based on the Bill-to location.
Why This Rule Exists
Without this deeming provision,
GST could be charged incorrectly because the invoice and the physical movement
of goods involve different parties.
Practical Business Example
A corporate office purchases
laptops for its branch office.
- Head Office: Mumbai
- Supplier: Bengaluru
- Delivery: Chennai Branch
The supplier invoices the Mumbai
Head Office but ships directly to the Chennai Branch.
The Place of Supply for the first
transaction is Mumbai, because the Head Office placed the order.
3. Where No Movement of Goods
is Involved [Section 10(1)(c)]
Rule
If the goods are supplied without
any movement, the Place of Supply is the location of the goods at the time
of delivery.
Examples
- Sale of machinery already installed at the buyer's
premises.
- Sale and leaseback arrangements.
- Sale of a factory with fixed equipment.
- Transfer of heavy equipment that remains at the
same location.
Example
A factory in Tamil Nadu
sells a permanently installed generator to another company. The generator
remains at the same factory.
Supplier: Tamil Nadu
Location of Goods: Tamil Nadu
Place of Supply: Tamil
Nadu
Since no movement occurs, the
Place of Supply is where the generator is located.
Important Note
The physical movement of
ownership documents does not affect the Place of Supply. What matters is
whether the goods themselves move.
4. Supply to an Unregistered
Person [Section 10(1)(ca)]
This provision applies to Business-to-Consumer
(B2C) transactions.
Rule
If goods are supplied to an unregistered
person, the Place of Supply is:
- The address of the recipient as recorded in
the invoice, if available.
- If no address is available, the location of the
supplier becomes the Place of Supply.
Example 1
An online seller in Karnataka
ships a product to a customer in Kerala, and the Kerala address appears
on the invoice.
Place of Supply: Kerala
Example 2
A customer purchases goods over
the counter and does not provide an address.
Supplier Location: Karnataka
No customer address is available.
Place of Supply: Karnataka
Why Was This Rule Introduced?
It ensures that GST revenue
reaches the State where the goods are consumed, even in B2C transactions.
5. Goods Assembled or
Installed at Site [Section 10(1)(d)]
Rule
When goods are assembled or
installed at a site, the Place of Supply is the place where the installation
or assembly takes place.
Examples
- Lift installation
- Solar power plant installation
- Industrial machinery installation
- Air-conditioning systems
- Modular furniture installation
Example
A company in Pune installs
an elevator in a building located in Hyderabad.
Supplier: Maharashtra
Installation Site: Telangana
Place of Supply: Telangana
IGST is applicable because the
supplier and the Place of Supply are in different States.
Practical Importance
Large engineering contracts often
involve installation at the customer's premises. GST is determined based on the
installation location rather than the dispatch location.
6. Goods Supplied on Board a
Conveyance [Section 10(1)(e)]
Rule
When goods are supplied on board
a conveyance, such as:
- Aircraft
- Train
- Bus
- Ship
the Place of Supply is the
location where the goods were taken on board before the journey commenced.
Example
A train begins its journey in Delhi
carrying food and beverages for sale during the trip.
Passengers purchase meals in Uttar
Pradesh and Madhya Pradesh.
The food was loaded in Delhi
before departure.
Place of Supply: Delhi
Another Example
An airline loads duty-paid food
in Mumbai before departure to Chennai.
Even if the meal is sold while
flying over another State, the Place of Supply remains Mumbai, because
that is where the goods were taken on board.
Summary Table – Section 10 Place of Supply of Goods
|
Nature of Supply |
Place of Supply |
|
Movement of
goods |
Location
where movement ends for delivery |
|
Bill-to
Ship-to |
Location of
the person who places the order (Bill-to party) |
|
No movement
of goods |
Location of
goods at the time of delivery |
|
Supply to
unregistered person |
Recipient's
address on the invoice; if unavailable, supplier's location |
|
Assembly or
installation |
Place where
goods are assembled or installed |
|
Goods
supplied on board |
Place where
goods are taken on board the conveyance |
Practical Tips for Businesses
- Always
determine the Place of Supply before issuing a tax invoice.
- Maintain
accurate delivery addresses for B2C supplies.
- Carefully
identify the Bill-to and Ship-to parties in triangular transactions.
- Installation
contracts should clearly specify the installation site.
- Keep
records of the boarding location for goods sold on trains, aircraft, or
ships.
- Section 10 applies only to domestic supplies of goods.
- The Place of Supply depends on the nature of the transaction, not merely the supplier's location.
- Correct determination of the Place of Supply ensures the correct levy of IGST or CGST and SGST.
- Businesses should maintain proper documentation to support the Place of Supply adopted in each transaction.
Section 11 – Place of Supply for Import and Export of Goods Under GST
International trade is an
integral part of modern business. Every day, businesses import raw materials,
machinery, and finished goods from other countries while exporting Indian
products worldwide. To ensure that GST is levied correctly on these transactions,
the Integrated Goods and Services Tax (IGST) Act, 2017 contains special
provisions under Section 11.
Unlike domestic transactions
governed by Section 10, Section 11 applies specifically to cross-border
transactions involving goods, i.e., imports and exports. The section
determines the Place of Supply (POS), which is essential for deciding
the GST implications of international trade.
The provisions of Section 11 are
simple yet extremely important for importers, exporters, customs brokers,
logistics companies, and GST professionals.
What is Section 11 of the IGST Act?
Section 11 specifies the Place
of Supply for imported and exported goods.
The law provides only two basic
rules:
- For imported goods, the Place of Supply is the
location of the importer.
- For exported goods, the Place of Supply is
outside India.
Although these rules appear
straightforward, they have significant implications for the levy of IGST,
customs procedures, and export benefits.
Why is Section 11 Important?
The determination of the Place of
Supply is essential because it:
- Identifies the State that will receive the IGST
settlement.
- Ensures uniform taxation of imports throughout
India.
- Allows exports to remain zero-rated supplies
under GST.
- Prevents double taxation.
- Facilitates seamless Input Tax Credit (ITC) for
importers.
Applicability of Section 11
Section 11 applies only when:
- Goods are imported into India, or
- Goods are exported from India.
It does not apply to
domestic supplies. Domestic transactions are governed by Section 10 of
the IGST Act.
Place of Supply in Case of Import of Goods
Legal Provision
When goods are imported into
India, the Place of Supply is the location of the importer.
This rule ensures that the
imported goods are taxed in the State where the importer is located and where
the goods are intended to be used or consumed.
Example 1 – Import of
Machinery
ABC Manufacturing Ltd., located
in Maharashtra, imports machinery from Germany.
- Supplier: Germany
- Importer: Maharashtra
- Port of Arrival: Mumbai
Place of Supply:
Maharashtra
The importer will pay IGST
along with applicable customs duties at the time of import. Subject to GST
provisions, the IGST paid can generally be claimed as Input Tax Credit (ITC).
Example 2 – Import Through a
Different Port
XYZ Traders, registered in Karnataka,
imports electronic goods from Japan.
The shipment arrives at Chennai
Port, but the importer is registered in Karnataka.
- Port of Import: Tamil Nadu
- Importer: Karnataka
Place of Supply: Karnataka
The location of the customs port
does not determine the Place of Supply. The decisive factor is the location of
the importer.
GST on Import of Goods
Under GST law, the import of
goods is treated as an Inter-State Supply. Therefore:
- IGST is payable on imports.
- Basic Customs Duty (BCD) is also applicable as per
the Customs Act.
- IGST is generally calculated on the assessable
value plus applicable customs duties, as prescribed under customs
valuation provisions.
Illustration – Import
Transaction
Suppose:
- Value of Goods: ₹10,00,000
- Basic Customs Duty: Applicable as per tariff
- IGST: Payable on the taxable value determined under
customs law
The importer pays IGST at the
time of customs clearance and may claim ITC if all GST conditions are
satisfied.
Place of Supply in Case of Export of Goods
Legal Provision
In the case of export of goods,
the Place of Supply is outside India.
This reflects the
destination-based principle of GST, where goods consumed outside India are not
burdened with domestic indirect taxes.
Example 1 – Export of Textiles
An exporter in Gujarat
supplies garments to a customer in the United States.
- Supplier: Gujarat
- Buyer: USA
Place of Supply: Outside
India
The transaction qualifies as an
export of goods, subject to the conditions prescribed under GST law.
Example 2 – Export of
Engineering Goods
A manufacturer in Tamil Nadu
exports industrial machinery to a customer in Australia.
Since the goods are supplied
outside India, the Place of Supply is outside India.
Such exports are treated as zero-rated
supplies, enabling the exporter to claim eligible GST benefits under the
law.
Why Are Exports Zero-Rated?
GST follows the destination-based
taxation principle.
Goods consumed outside India
should not carry Indian GST. Therefore, exports are treated as zero-rated
supplies, allowing Indian products to remain competitive in international
markets.
The concept of zero-rating
ensures that taxes paid on inputs used in manufacturing exported goods do not
become part of the export cost.
Import vs Export – Place of
Supply Comparison
|
Particulars |
Import of Goods |
Export of Goods |
|
Applicable Section |
Section 11 |
Section 11 |
|
Place of Supply |
Location of the Importer |
Outside India |
|
Nature of Supply |
Inter-State Supply |
Inter-State Supply (Zero-Rated) |
|
GST Applicable |
IGST payable at import |
Zero-rated under GST, subject to prescribed conditions |
Practical Examples
Example 1 – Import of Raw
Material
A pharmaceutical company in Hyderabad
imports chemicals from Switzerland.
- Importer: Telangana
- Supplier: Switzerland
Place of Supply: Telangana
IGST is payable at the time of
import and may be claimed as ITC, subject to eligibility.
Example 2 – Export of Rice
An exporter in Punjab
ships rice to Dubai.
The goods leave India through Mundra
Port in Gujarat.
Place of Supply: Outside
India
The location of the port does not
change the Place of Supply.
Example 3 – Import Through Air
Cargo
A company registered in Delhi
imports laptops from Singapore through Mumbai Airport.
- Port of Entry: Maharashtra
- Importer: Delhi
Place of Supply: Delhi
The Place of Supply is linked to
the importer's location, not the airport where the goods enter India.
Common Mistakes to Avoid
Many taxpayers incorrectly assume
that:
- The customs port determines the Place of Supply.
- Exports attract normal GST like domestic sales.
- Import transactions are governed by Section 10.
These assumptions are incorrect.
Always remember:
- Section 10 applies to domestic supplies.
- Section 11 applies exclusively to imports
and exports of goods.
- Section 11 applies only to international trade in goods.
- For imported goods, the Place of Supply is the location of the importer.
- For exported goods, the Place of Supply is outside India.
- Imports are treated as Inter-State Supplies and are subject to IGST.
- Exports are zero-rated supplies, ensuring Indian goods remain competitive in global markets.
- The customs port is not the determining factor for the Place of Supply.
Section 12 – Place of Supply of Services Under GST (Domestic Transactions) – Complete Guide with Examples
Section 12 of the Integrated
Goods and Services Tax (IGST) Act, 2017 lays down the rules for determining
the Place of Supply (POS) of services when both the supplier and the
recipient are located in India. These provisions are essential because
services are intangible and cannot be physically moved like goods. Therefore,
specific rules are required to determine where a service is deemed to be
supplied for GST purposes.
Unlike goods, where the place of
delivery often determines the Place of Supply, services require different
criteria such as the recipient's location, the location of immovable property,
the place of performance, or the venue of an event.
What is Section 12 of the IGST Act?
Section 12 provides the rules for
determining the Place of Supply of Services where:
- The supplier is located in India; and
- The recipient is also located in India.
If either the supplier or the
recipient is located outside India, Section 13 of the IGST Act applies
instead.
Why is Section 12 Important?
Determining the Place of Supply
helps in deciding:
- Whether IGST or CGST & SGST is payable.
- Which State will receive GST revenue.
- Whether the supply is Inter-State or Intra-State.
- Proper GST compliance and return filing.
- Avoidance of tax disputes.
Applicability of Section 12
Section 12 applies only when:
- Supplier is located in India.
- Recipient is located in India.
- The transaction involves the supply of services.
Categories Covered Under Section 12
Section 12 contains specific
rules for various categories of services:
- General (Residuary) Services
- Services relating to Immovable Property
- Performance-Based Services
- Training and Performance Appraisal Services
- Event Admission Services
- Event Organisation Services
- Transportation of Goods
- Passenger Transportation
- On-board Services
- Telecommunication Services
- Banking and Financial Services
- Insurance Services
- Advertisement Services to Government
Each category has a separate rule
for determining the Place of Supply.
1. General Rule (Residuary
Provision) – Section 12(2)
Applicability
This is the default rule and
applies whenever no specific provision covers the service.
Examples include:
- Chartered Accountant Services
- Legal Consultancy
- Management Consultancy
- Software Consultancy
- Tax Consultancy
- Audit Services
Rule
B2B Supply
If the service is supplied to a
registered person (or the recipient's address is available in the supplier's
records), the Place of Supply is the location of the recipient.
Example
A Chartered Accountant in Kolkata
provides GST consultancy to a registered company in Bengaluru.
- Supplier: West Bengal
- Recipient: Karnataka
Place of Supply: Karnataka
Since the supplier and Place of
Supply are in different States, IGST is applicable.
B2C Supply
If the recipient is unregistered
and the recipient's address is not available, the Place of Supply is the
location of the supplier.
Example
A consultant in Delhi provides
consultancy to an individual who does not provide an address.
Place of Supply: Delhi
Summary
|
Supply Type |
Place of Supply |
|
B2B |
Location of Recipient |
|
B2C (Address Available) |
Location of Recipient |
|
B2C (Address Not Available) |
Location of Supplier |
2. Services Related to
Immovable Property – Section 12(3)
Covered Services
This provision applies to
services directly connected with immovable property, such as:
- Construction Services
- Architectural Services
- Interior Decoration
- Renting of Property
- Hotel Accommodation
- Guest House Services
- Resort Accommodation
- House Boat Accommodation
- Cruise Accommodation
Rule
The Place of Supply is the
location of the immovable property.
If the property is located
outside India, the Place of Supply becomes the recipient's location.
If the property is located in
more than one State, the Place of Supply is apportioned among those States.
Example 1
An architect in Delhi designs a
hotel situated in Jaipur.
Supplier: Delhi
Property: Rajasthan
Place of Supply: Rajasthan
IGST will apply.
Example 2
A hotel located in Goa provides
accommodation to a tourist from Maharashtra.
Although the tourist belongs to
Maharashtra, the hotel is situated in Goa.
Place of Supply: Goa
CGST and SGST of Goa are
applicable.
3. Performance-Based Services
– Section 12(4)
Certain services are consumed
where they are actually performed.
These include:
- Restaurant Services
- Catering Services
- Personal Grooming
- Beauty Treatment
- Cosmetic Surgery
- Plastic Surgery
- Fitness Centre
- Health Care Services
Rule
The Place of Supply is the
place where the service is actually performed.
Example
A resident of Delhi visits a
beauty salon in Mumbai.
The service is performed in
Mumbai.
Place of Supply:
Maharashtra
Another Example
A patient from Gujarat undergoes
cosmetic surgery in Chennai.
The Place of Supply is Tamil Nadu
because the service is performed there.
Why This Rule Exists
These services cannot be consumed
remotely.
The customer must physically
visit the service provider.
Therefore, GST is collected where
the service is actually performed.
Key Takeaways
- Section 12 applies only when both supplier and
recipient are located in India.
- The general rule is based on the recipient's
location.
- Services relating to immovable property are taxed
where the property is located.
- Performance-based services are taxed where the
service is actually performed.
- Correct determination of the Place of Supply
ensures the correct levy of IGST or CGST + SGST.
Section 12(5) – Place of
Supply for Training and Performance Appraisal Services
Training and performance
appraisal services are provided by educational institutions, professional
trainers, coaching centres, corporate trainers, and consultants. The Place of
Supply depends on whether the recipient is registered or unregistered.
Rule
Business-to-Business (B2B)
Where the recipient is a registered
person, the Place of Supply is the location of the recipient.
Business-to-Consumer (B2C)
Where the recipient is an unregistered
person, the Place of Supply is the actual place where the training or
appraisal is conducted.
Example – B2B
A GST training institute in Delhi
conducts a GST workshop for a registered company located in Jaipur.
- Supplier: Delhi
- Recipient: Rajasthan
Place of Supply: Rajasthan
Since the supplier and the Place
of Supply are in different States, IGST is applicable.
Example – B2C
A coaching institute in Mumbai
conducts a one-day GST seminar for individual students.
The seminar is held in Mumbai.
Place of Supply:
Maharashtra
CGST and SGST are applicable.
Section 12(6) – Admission to
Events
This provision applies to
services by way of admission to:
- Cultural events
- Educational events
- Sporting events
- Entertainment programmes
- Exhibitions
- Conferences
- Trade fairs
Rule
The Place of Supply is the
place where the event is actually held.
Example
A person from Karnataka purchases
an entry ticket for a business exhibition held in Hyderabad.
Although the attendee belongs to
Karnataka,
Place of Supply: Telangana
The event location determines the
Place of Supply.
Section 12(7) – Organisation
of Events (Back-End Services)
This section applies to services
such as:
- Event management
- Event organisation
- Sponsorship
- Technical support
- Stage management
- Exhibition management
Rule
B2B
The Place of Supply is the
location of the recipient.
B2C
The Place of Supply is the
place where the event is actually held.
If the event is held outside
India, the Place of Supply becomes the recipient's location.
Where an event is held in more
than one State, the value of services is apportioned among the respective
States.
Example – B2B
An event management company in
Delhi organises a conference for a registered company in Bengaluru.
Conference Venue: Goa
Place of Supply: Karnataka
(Recipient's location)
Example – B2C
A wedding planner in Jaipur
organises a private wedding in Udaipur.
Recipient is an individual.
Place of Supply: Rajasthan
(Location of the event)
Section 12(8) – Transportation
of Goods
This provision applies to
transport of goods by road, rail, air, sea, or inland waterways.
Rule
B2B
Place of Supply: Location
of the recipient.
B2C
Place of Supply: Place
where the goods are handed over for transportation (Loading Place).
Example – B2B
A logistics company in Gujarat
transports goods for a registered dealer in Maharashtra.
Place of Supply:
Maharashtra
Example – B2C
An individual books household
goods for transport from Ranchi to Patna.
Goods are handed over at Ranchi.
Place of Supply: Jharkhand
Section 12(9) – Passenger
Transportation Services
This provision covers:
- Airlines
- Railways
- Bus operators
- Cruise operators
Rule
B2B
Place of Supply: Location
of the recipient.
B2C
Place of Supply: Place
where the passenger embarks on the journey.
If the boarding point cannot be
determined at the time of booking, the general rule under Section 12(2)
applies.
Example
A passenger boards a train at
Kolkata for Delhi.
Place of Supply: West
Bengal
Section 12(10) – Services
Provided On Board a Conveyance
This applies to services supplied
during a journey on:
- Aircraft
- Train
- Bus
- Ship
Examples include:
- Meals
- Wi-Fi
- Entertainment
- Refreshments
Rule
The Place of Supply is the
first scheduled point of departure of the conveyance.
Example
A flight departs from Mumbai to
Chennai.
Food is served during the flight.
Place of Supply:
Maharashtra
Section 12(11) –
Telecommunication Services
Telecommunication services
include:
- Telephone connections
- Internet services
- Broadband
- Mobile services
- DTH services
The Place of Supply depends on
the type of connection.
Fixed Line Services
Examples:
- Landline
- Broadband
- Cable connection
Place of Supply: Location
where the fixed equipment is installed.
Post-paid Mobile Connection
Place of Supply: Billing
address of the subscriber.
Prepaid Recharge Through
Selling Agent
Place of Supply: Address
of the selling agent or the place where the recharge is sold.
Online Recharge
Place of Supply: Location
of the recipient.
Example
A customer in Kolkata recharges a
prepaid mobile number through an online payment app.
Place of Supply: West
Bengal
Section 12(12) – Banking and
Financial Services
This section applies to:
- Banking services
- Financial institutions
- NBFCs
- Stock brokers
Rule
If the recipient's location is
available in the records of the supplier,
Place of Supply: Location
of the recipient.
If the recipient's location is
not available,
Place of Supply: Location
of the supplier.
Example
A bank branch in Delhi provides a
loan to a customer whose address is recorded in Jaipur.
Place of Supply: Rajasthan
Section 12(13) – Insurance
Services
Rule
Registered Person (B2B)
Place of Supply: Location
of the recipient.
Unregistered Person (B2C)
Place of Supply: Location
of the recipient available in the records of the insurer.
Example
An insurance company in Mumbai
issues a motor insurance policy to an individual residing in Pune.
Place of Supply:
Maharashtra
Section 12(14) – Advertisement
Services to Government
This provision applies when
advertisement services are supplied to:
- Central Government
- State Government
- Statutory Authorities
- Local Authorities
The Place of Supply is allocated
proportionately among States or Union Territories based on the reach of the
advertisement. The allocation criteria include:
|
Medium |
Basis of
Allocation |
|
Newspaper |
Number of readers |
|
Pamphlets |
Number of pamphlets distributed |
|
Hoardings |
Number of hoardings displayed |
|
Railway Advertisements |
Track length or railway stations |
|
Gas Bills |
Number of consumers |
|
Radio |
Number of listeners |
|
Television |
Number of viewers |
|
Internet |
Number of subscribers |
|
Cinema |
Number of screens |
Example
The Central Government releases
an awareness campaign through television channels across India.
The advertisement value is
distributed among different States based on the number of viewers in
each State.
Summary Table – Section 12
|
Section |
Nature of Service |
Place of Supply |
|
12(2) |
General
Services |
Recipient's
location (or supplier's location if applicable) |
|
12(3) |
Immovable
Property |
Property
location |
|
12(4) |
Restaurant,
Beauty, Health Care, Catering |
Place of
performance |
|
12(5) |
Training
& Appraisal |
Recipient's
location (B2B) / Place of performance (B2C) |
|
12(6) |
Admission to
Events |
Event
location |
|
12(7) |
Event
Organisation |
Recipient's
location (B2B) / Event location (B2C) |
|
12(8) |
Transportation
of Goods |
Recipient's
location (B2B) / Loading place (B2C) |
|
12(9) |
Passenger
Transportation |
Recipient's
location (B2B) / Boarding point (B2C) |
|
12(10) |
On-board
Services |
First
scheduled point of departure |
|
12(11) |
Telecommunication |
Depends on
the type of connection |
|
12(12) |
Banking &
Financial Services |
Recipient's
location, if available; otherwise supplier's location |
|
12(13) |
Insurance
Services |
Recipient's
location |
|
12(14) |
Government
Advertisement Services |
Proportionately
among States/UTs |
Section 13 – Place of Supply of Services Where Either the Supplier or Recipient is Located Outside India (Complete Guide with Examples)
Section 13 of the Integrated
Goods and Services Tax (IGST) Act, 2017 contains the provisions for
determining the Place of Supply (POS) of services in international
transactions. It applies whenever either the supplier or the recipient
of services is located outside India. Unlike Section 12, which governs
domestic transactions, Section 13 ensures that cross-border services are taxed
in accordance with the destination-based principle of GST.
Understanding Section 13 is
essential for exporters, importers, multinational companies, IT service
providers, consultants, financial institutions, travel operators, and
businesses engaged in international trade.
What is Section 13 of the IGST Act?
Section 13 provides the rules for
determining the Place of Supply of services when:
- The supplier is located outside India; or
- The recipient is located outside India.
In simple words, whenever an
international service transaction takes place, Section 13 determines where the
service is deemed to have been supplied for GST purposes.
Why is Section 13 Important?
Determining the Place of Supply
under Section 13 helps in:
- Identifying whether the transaction qualifies as an
export or import of services.
- Determining whether IGST is payable.
- Identifying zero-rated supplies.
- Avoiding double taxation.
- Ensuring proper GST compliance in cross-border
transactions.
Applicability of Section 13
Section 13 applies when either
of the following conditions is satisfied:
- Supplier is located outside India.
- Recipient is located outside India.
If both the supplier and
recipient are located in India, Section 12 applies instead.
General Rule – Section 13(2)
Rule
The general rule states that the Place
of Supply shall be the location of the recipient of services.
If the recipient's location is not
available, then the Place of Supply shall be the location of the
supplier.
This is the default rule and
applies whenever no specific provision covers the service.
Services Covered
Examples include:
- Chartered Accountant Services
- Legal Consultancy
- Management Consultancy
- IT Consultancy
- Business Advisory
- Software Development
- Digital Consulting
Example 1
An Indian software company
develops software for a client located in the United Kingdom.
- Supplier: India
- Recipient: UK
Place of Supply: United
Kingdom
Since the recipient is located
outside India and other export conditions are satisfied, the transaction may
qualify as an export of services.
Example 2
A management consultant in
Singapore provides consultancy to a company in Mumbai.
- Supplier: Singapore
- Recipient: India
Place of Supply: India
The transaction becomes an import
of services, and GST implications arise accordingly.
Section 13(3) – Performance-Based Services
This provision applies to
services that require the physical presence of goods or individuals.
Covered Services
- Repair of machinery
- Maintenance services
- Testing services
- Certification
- Beauty treatment
- Cosmetic treatment
- Medical treatment
Rule
The Place of Supply is the
place where the services are actually performed.
Example
A company in Germany sends
machinery to India for repairs.
The repair work is carried out in
Chennai.
Place of Supply: India
Another Example
A tourist from Australia receives
cosmetic treatment in Delhi.
Place of Supply: India
Because the service is actually
performed in India.
Section 13(4) – Services Relating to Immovable Property
This provision covers services
directly connected with immovable property.
Examples
- Construction
- Architecture
- Interior Decoration
- Hotel Accommodation
- Property Management
- Renting of Property
Rule
The Place of Supply is the
location of the immovable property.
Example
An Indian architect designs a
hotel situated in Dubai.
Property Location: Dubai
Place of Supply: Dubai
Section 13(5) – Admission to Events
This provision applies to
admission to:
- Cultural Events
- Sporting Events
- Educational Conferences
- Exhibitions
- Trade Fairs
Rule
The Place of Supply is the
place where the event is actually held.
Example
An Indian company purchases
admission tickets for an exhibition held in Singapore.
Place of Supply: Singapore
Section 13(6) – Services Supplied in More Than One Location
Sometimes services are performed
in multiple countries.
Rule
Where services are supplied in
more than one location, including a location in the taxable territory, the Place
of Supply shall be the location in the taxable territory.
Example
An engineering consultant
supervises a project partly in India and partly in Nepal.
Since part of the service is
performed in India,
Place of Supply: India
Section 13(7) – Services Supplied in More Than One State
Where services are performed in
multiple States within India,
the value of the service is
apportioned among the respective States according to the contract or prescribed
rules.
Section 13(8) – Special Services
Certain services have special
Place of Supply provisions.
(a) Banking Services
The Place of Supply is the
location of the supplier.
Example
A foreign bank provides banking
services from London.
Supplier Location: London
Place of Supply: London
(b) Intermediary Services
Intermediary means a broker or
agent arranging or facilitating a supply between two parties.
Rule
The Place of Supply is the
location of the supplier.
Example
An intermediary located in India
arranges a supply between a company in the USA and a buyer in Germany.
Supplier (Intermediary): India
Place of Supply: India
(c) Hiring of Means of
Transport
This applies to short-term hiring
of:
- Cars
- Boats
- Aircraft
- Yachts
Rule
The Place of Supply is the
location of the supplier.
Section 13(9) – Transportation of Goods
The earlier specific provision
for transportation of goods has undergone legislative changes. Users should
always refer to the latest statutory position, notifications, and amendments
while determining the Place of Supply for such services.
Section 13(10) – Passenger Transportation
Rule
The Place of Supply is the
place where the passenger embarks on the conveyance for a continuous journey.
Example
A passenger boards a flight from
Delhi to London.
Place of Supply: Delhi
Section 13(11) – Services on Board a Conveyance
This provision covers:
- Meals
- Entertainment
- Internet
- Other services provided during travel
Rule
The Place of Supply is the
first scheduled point of departure of the conveyance.
Example
A flight departs from Mumbai for
Dubai.
Food served during the journey
will have:
Place of Supply: Mumbai
Section 13(12) – Online Information and Database Access or Retrieval (OIDAR) Services
OIDAR services include services
delivered over the internet with minimal human intervention, such as:
- Online software
- Cloud services
- Online gaming
- E-books
- Music streaming
- Video streaming
- Digital databases
Rule
The Place of Supply is the
location of the recipient of the service.
Example
A customer in India subscribes to
an online streaming platform operated from another country.
Recipient: India
Place of Supply: India
GST implications are determined
accordingly under the OIDAR provisions.
Summary Table – Section 13
|
Section |
Nature of Service |
Place of Supply |
|
13(2) |
General Rule |
Recipient's
location; if unavailable, supplier's location |
|
13(3) |
Performance-based
services |
Place where
services are actually performed |
|
13(4) |
Immovable
property |
Property
location |
|
13(5) |
Admission to
events |
Event
location |
|
13(6) |
Services in
multiple countries |
Location in
taxable territory |
|
13(7) |
Services in
multiple States |
Apportioned
among States |
|
13(8) |
Banking,
Intermediary, Short-term hiring of transport |
Supplier's
location |
|
13(9) |
Transportation
of goods |
Subject to
the applicable statutory provisions and amendments |
|
13(10) |
Passenger
transportation |
Place where
passenger embarks |
|
13(11) |
On-board
services |
First
scheduled point of departure |
|
13(12) |
OIDAR
services |
Recipient's
location |
Practical Tips
- Always determine whether Section 12 or Section 13
applies before identifying the Place of Supply.
- Verify the location of both the supplier and the
recipient.
- Maintain documentary evidence for export and import
of services.
- Review the latest amendments and notifications,
especially for provisions that have been updated over time.
- For intermediary and OIDAR services, apply the
specific rules rather than relying on the general rule.
Section 13 of the IGST Act provides a comprehensive framework for determining the Place of Supply of Services in international transactions. By prescribing specific rules for general services, performance-based services, immovable property, events, intermediary services, passenger transport, and OIDAR services, it ensures that GST is levied in line with the destination-based taxation principle. A clear understanding of these provisions helps businesses engaged in cross-border trade comply with GST law, correctly classify transactions, and minimize the risk of tax disputes.
Section 14 – Place of Supply of OIDAR Services Under GST (Complete Guide with Examples)
Section 14 of the Integrated
Goods and Services Tax (IGST) Act, 2017 contains special provisions
relating to Online Information and Database Access or Retrieval (OIDAR)
Services. With the rapid growth of digital businesses, cloud computing,
online education, software subscriptions, streaming platforms, and digital
marketplaces, it became necessary to introduce a separate mechanism for taxing
cross-border digital services.
Unlike traditional services,
OIDAR services are delivered through the internet with minimal or no human
intervention. Therefore, Section 14 provides a special Place of Supply
mechanism to ensure that GST is collected in the country where these services
are consumed.
What is OIDAR?
OIDAR stands for Online
Information and Database Access or Retrieval Services.
These are services that are:
- Delivered over the internet or an electronic
network.
- Essentially automated.
- Supplied with minimal human intervention.
- Impossible to provide without information
technology.
In simple words, if a customer
can receive a service online without interacting directly with a person, it is
generally considered an OIDAR service.
Examples of OIDAR Services
Some common examples include:
- Cloud computing services
- Online software subscriptions (SaaS)
- Digital databases
- E-books
- Music streaming platforms
- Video streaming services
- Online gaming platforms
- Mobile applications
- Website hosting
- Online storage services
- Digital advertising services
- Subscription-based online journals
- Downloadable software and antivirus programs
Objective of Section 14
The objective of Section 14 is to
ensure that digital services supplied by foreign companies to customers in
India are subject to GST in India, thereby maintaining tax neutrality between
domestic and foreign service providers.
Without this provision, foreign
digital service providers could have supplied services in India without
charging GST, resulting in an uneven playing field.
Applicability of Section 14
Section 14 applies when:
- The supplier of OIDAR services is located outside
India.
- The recipient is located in India.
- The service supplied qualifies as an OIDAR service
under the GST law.
Place of Supply for OIDAR
Services
For OIDAR services supplied by a
person located outside India to a recipient in India, the Place of Supply is
the location of the recipient.
This ensures that GST is levied
where the service is actually consumed, in line with the destination-based
principle of GST.
Example
A student in India subscribes to
an online learning platform operated from the United States.
- Supplier: USA
- Recipient: India
Place of Supply: India
Accordingly, the transaction
falls within the Indian GST framework, subject to the applicable provisions.
Who is Liable to Pay GST?
Section 14 creates a special
compliance mechanism for foreign suppliers of OIDAR services.
Generally, the supplier
located outside India is responsible for paying IGST on such supplies made
to recipients in India.
Registration Requirement
A supplier located outside India
providing OIDAR services to customers in India is required to obtain GST
registration in India as prescribed under the GST law.
Unlike normal registration, the
law allows a single registration for supplies made across India,
simplifying compliance for foreign digital service providers.
Appointment of an Agent in
India
If the foreign supplier has an agent
or representative in India, the agent may be responsible for complying with
GST obligations on behalf of the supplier.
This includes:
- Registration under GST.
- Payment of IGST.
- Filing prescribed returns.
- Compliance with GST provisions.
Appointment of a
Representative
If the foreign supplier:
- has no physical presence in India, and
- does not have an agent in India,
the supplier is required to appoint
a person in India for the purpose of complying with GST obligations and
paying IGST.
Consequences of Non-Compliance
The uploaded blog states that
where the supplier or its agent fails to comply with the prescribed provisions,
the supplier's application may be liable to be blocked under the
applicable GST framework.
Practical Examples
Example 1 – Video Streaming
Subscription
A resident of Delhi purchases a
monthly subscription from a foreign video streaming platform.
- Supplier: Outside India
- Customer: Delhi
Place of Supply: Delhi
(India)
The supply is taxable in India
under the applicable OIDAR provisions.
Example 2 – Cloud Storage
Service
An Indian business subscribes to
cloud storage services from a company located in Singapore.
- Supplier: Singapore
- Recipient: India
Place of Supply: India
The transaction is covered under
the OIDAR provisions.
Example 3 – E-Book Purchase
A customer in Mumbai purchases an
e-book from an overseas digital publisher.
- Supplier: Outside India
- Recipient: Maharashtra
Place of Supply:
Maharashtra (India)
GST implications are determined
according to the OIDAR rules.
OIDAR vs Traditional Services
|
Particulars |
OIDAR Services |
Traditional Services |
|
Mode of
Supply |
Through the
internet or an electronic network |
Usually
provided through physical interaction or significant human involvement |
|
Human
Intervention |
Minimal or
none |
Significant |
|
Delivery |
Automated |
Manual or
personal |
|
Examples |
Streaming,
cloud services, SaaS, e-books |
Consultancy,
legal services, repair services |
Compliance Checklist for Foreign OIDAR Suppliers
- Determine
whether the service qualifies as OIDAR.
- Identify
whether the recipient is located in India.
- Obtain
the required GST registration in India.
- Appoint
an agent or representative in India if required.
- Pay
IGST and comply with GST return filing requirements.
- Section 14 specifically deals with OIDAR services supplied by persons located outside India to recipients in India.
- The Place of Supply is the location of the recipient in India.
- Foreign suppliers are generally responsible for GST compliance.
- A single GST registration may be obtained for supplies across India.
- If there is no physical presence or agent in India, the supplier must appoint a representative in India.
- Non-compliance can result in action under the GST framework, including blocking of the supplier's application, as noted in the uploaded blog.
Section 14A – Special Provision for Specified Actionable Claims Under GST (Complete Guide with Examples)
Section 14A of the Integrated
Goods and Services Tax (IGST) Act, 2017 contains special provisions
relating to Specified Actionable Claims supplied by a person located outside
the taxable territory to a person in India. This provision was introduced
to ensure that cross-border suppliers of online betting, gambling, casino,
lottery, horse racing, and online money gaming services are brought within the
GST framework and made liable to pay Integrated GST (IGST).
With the rapid growth of online
gaming and digital betting platforms, many foreign companies began offering
services to Indian users without having a physical presence in India. Section
14A addresses this challenge by creating a special compliance mechanism that
requires such suppliers to register under GST and discharge their tax
liability.
What is Section 14A of the IGST Act?
Section 14A provides a special
taxation mechanism for Specified Actionable Claims supplied by a
person located outside India to a recipient located in India.
The provision ensures that GST is
collected on cross-border online gaming and betting transactions, even if the
supplier has no office or establishment in India.
Objective of Section 14A
The primary objectives of Section
14A are:
- To bring foreign online gaming and betting
platforms within the GST framework.
- To ensure tax neutrality between Indian and foreign
service providers.
- To protect government revenue from digital
cross-border transactions.
- To simplify GST compliance for overseas suppliers
through a single registration mechanism.
What are Specified Actionable
Claims?
Under GST, Specified
Actionable Claims include:
- Betting
- Gambling
- Lottery
- Online Money Gaming
- Casino
- Horse Racing
These activities are specifically
taxable under the GST law and are treated differently from other actionable
claims.
Applicability of Section 14A
Section 14A applies when:
- The supplier is located outside the taxable
territory (outside India).
- The recipient is located in India.
- The supply relates to Specified Actionable
Claims.
If these conditions are
satisfied, the supplier must comply with the provisions of Section 14A.
Liability to Pay IGST
Rule
The supplier located outside
the taxable territory is liable to pay IGST on the supply of
specified actionable claims made to persons in India.
Unlike many domestic
transactions, the responsibility for paying GST rests with the foreign supplier
under this special provision.
Example
A foreign online gaming platform
allows users in India to participate in paid online games that fall within the
category of specified actionable claims.
- Supplier: Outside India
- Recipient: India
Liability to Pay IGST:
Foreign supplier
Single GST Registration
To simplify compliance, Section
14A allows the foreign supplier to obtain a single GST registration for the
whole of India.
This means the supplier is not
required to obtain separate GST registrations in every State or Union Territory
where customers are located.
Benefit
- Simplified compliance
- Single registration
- Centralized GST reporting
- Easier tax administration
Role of an Agent in India
If the foreign supplier has an agent
located in India, the agent is required to:
- Obtain GST registration (where applicable).
- Pay IGST on behalf of the foreign supplier.
- Comply with all GST provisions relating to the
supply of specified actionable claims.
Example
A foreign gaming company appoints
an Indian representative to manage its operations.
In this case, the Indian agent
will be responsible for fulfilling the GST obligations on behalf of the foreign
supplier.
When There Is No Agent or
Physical Presence in India
If the foreign supplier:
- does not have a physical establishment in India,
and
- does not have an agent in India,
the supplier must appoint a
person in India for the purpose of paying IGST and complying with GST
requirements.
This ensures that there is always
a responsible person available for GST compliance within India.
Consequences of Non-Compliance
If the supplier or its agent
fails to comply with the provisions of Section 14A, the uploaded blog states
that the application of such supplier may be liable to be blocked under
the applicable GST provisions.
Failure to comply may also lead
to other actions under the GST law, depending on the facts and applicable
statutory provisions.
Practical Examples
Example 1 – Online Money Gaming Platform
A company incorporated outside India operates a paid online
gaming platform accessible to Indian users.
- Supplier:
Outside India
- Users:
India
Since the activity falls under specified actionable
claims, the foreign supplier is required to comply with Section 14A and
discharge the applicable IGST liability.
Example 2 – Foreign Betting Website
A betting website based outside India accepts participation
from Indian users.
The website has no office in India but has appointed an
Indian representative.
The representative is responsible for complying with the GST
provisions on behalf of the foreign supplier.
Example 3 – No Agent in India
A foreign operator of an online gaming platform supplies
services to Indian users but has neither an office nor an agent in India.
Under Section 14A, the supplier must appoint a person in
India to comply with the GST law and pay the applicable IGST.
Compliance Checklist
Foreign suppliers covered by Section 14A should ensure that
they:
- Determine
whether their supplies qualify as Specified Actionable Claims.
- Obtain
the prescribed GST registration.
- Pay
IGST on supplies made to persons in India.
- Appoint
an agent or representative in India if required.
- Maintain
proper records and comply with GST return filing requirements.
Summary Table – Section 14A
|
Particulars |
Provision |
|
Applicable to |
Specified
Actionable Claims supplied from outside India to persons in India |
|
Person liable
to pay IGST |
Supplier
located outside the taxable territory |
|
GST
Registration |
Single
registration for all India |
|
Agent in
India |
Agent may
comply with GST obligations on behalf of the supplier |
|
No agent or
office in India |
Supplier must
appoint a person in India for GST compliance |
|
Consequence
of non-compliance |
Supplier's
application may be blocked under the applicable GST provisions |
- Section 14A is a special provision applicable to Specified Actionable Claims.
- It applies where the supplier is located outside India and the recipient is located in India.
- The foreign supplier is responsible for paying IGST.
- A single GST registration is available for supplies across India.
- Where there is no physical presence or agent in India, the supplier must appoint a representative in India.
- Non-compliance may result in regulatory action, including blocking of the supplier's application as noted in the uploaded blog.
Frequently Asked Questions (FAQs)
Are imports of services covered under Section 7?
Yes. Import of services is also treated as an Inter-State Supply under the IGST Act.
Why does Section 9 refer to the nearest coastal State?
Because territorial waters are not part of any State, the GST law deems them to belong to the nearest coastal State or Union Territory for taxation purposes.
Does Section 11 apply to services?
No. Section 11 applies only to goods. The Place of Supply for services involving international transactions is governed by Section 13 of the IGST Act.
When does Section 13 apply?
Section 13 applies when either the supplier or the recipient of services is located outside India.
What does OIDAR stand for?
OIDAR stands for Online Information and Database Access or Retrieval Services.
Who is covered under Section 14?
Foreign suppliers providing OIDAR services to recipients located in India.
What is Section 14A of the IGST Act?
Section 14A contains special provisions for the supply of Specified Actionable Claims by suppliers located outside India to persons in India.
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