Updated provisions of Place of Supply under GST

Provision on Place of Supply under GST 

Determination of Place of Supply 

What is the place of supply in GST? 

• GST is a destination-based tax, i.e., the goods/services will be taxed at the place where they are consumed and not at the origin of supply. So, the state where they are consumed will have the right to collect GST. This, in turn, makes the concept of the place of supply crucial under GST as all the provisions of GST revolves around it.
• The objective of POPOS (Provision of the place of supply) in the domestic transactions is to effectuate free flow of Credit amongst Multiple states, In case credit is not eligible(B2C), the State component goes to the consuming state.

As per Section 7 & Section 8 of IGST Act, subject to the provisions of section 10 and Section 12, the supply of Goods/Services where the location of the supplier and the place of supply of goods/services are in the same State or same Union territory shall be treated as intra-State supply. If the location of the supplier and the place of supply are in two different states or UTs, they shall be treated as a supply of goods/services in the course of inter-State trade or commerce.

Provided that the following supply shall always be treated as Interstate Supply, namely:—

(i) supply of Goods/Services to or by an SEZ developer or an SEZ unit;

(ii) goods imported into the territory of India till they cross the customs frontiers of India; or

(iii) supplies made to a tourist referred to in section 15.

As per section 7(5)(a) of IGST Act, the supply of goods or services or both, when the supplier is located in India and the place of supply is outside India, the supply will be treated as supply in the course of inter-State trade or commerce i.e Export of Services. It may be noted that if the supply does not fall within the definition of export of services even if the place of supply is out of India, it will be inter-state supply and IGST will be payable.

Section 9 talks about supplies made in territorial waters where- 

• the location of the supplier is in the territorial waters, the location of such supplier; or
• the place of supply is in the territorial waters, the place of supply, 

shall, for the purposes of this Act, be deemed to be in the coastal State or Union territory where the nearest point of the appropriate baseline is located.

Place of supply of goods or services under GST defines whether the transaction will be considered as intrastate or inter-state, and accordingly, levy of SGST and CGST or IGST will be determined. It is determined according to Sections 10, 11,12, and 13 of the IGST Act.

Place of supply of goods is determined as per Section 10 and Section 11 

• Section 10: Place of Supply of Goods other than the supply of goods imported into or exported from India 
• Where the movement of goods are involved:- 

 Section 11: Place of Supply of Goods imported into or exported from India

The place of supply of goods :
(a) imported into India shall be the location of the importer
(b) exported from India shall be the location outside India.

• Place of supply of Service is determined as per Section 12 and Section 13
•  Section 12: Place of Supply of Services in case of transactions within India i.e. where the location of supplier and location of recipient is in India.

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