2017-07-22 03:04:50GST CenterEnglishPlace of Supply in GST is the place of delivery of goods or consumption of service. It is the registered location of recipient of a good or...https://quickbooks.intuit.com/in/resources/in_qrc/uploads/2017/07/Place_Supply-e1558008190528.jpghttps://quickbooks.intuit.com/in/resources/gst-center/place-supply-gst/What is Place of Supply in GST?

What is Place of Supply in GST?

4 min read

What is Place of Supply?

Place of Supply is nothing but the place of delivery of goods or consumption of service. In other words, it is the registered location of recipient of a good or service. Under GST, place of supply is divided into following categories:

  • The Place of Supply of Goods
  • Place of supply of Services
    • where location of supplier and resident is in India
    • and where location of supplier and resident is outside India
  • The Place of supply in case of Imports/exports

Each section is clearly laid out in varied sections under the IGST Act.

Why is Place of Supply Important?

Good and Service Tax (GST) is a destination based tax. This means that the rate of applicable GST is determined by the place of supply. There are 3 components of GST, namely CGST, IGST and SGCT. Depending on the place of supply, a sale of good or service will attract IGST or a combination of CGST and SGST.

  • Central Goods and Services Tax or CGST is the component of GST that is collected by the central government on sales of goods and services. It replaces the taxes levied by the central government in the past.
  • Integrated Goods and Services Tax or IGST is the GST applicable on sale of movement of goods and services between two states. It is uniform across all states and the revenue from this tax will be split between the central government and the state of supply.
  • State Goods and Services Tax or SGST is the state’s component of tax on movement or sales of goods and services within a state. This tax replaces the earlier taxes levied by various state governments on sale of goods.

Nature of Supply?

Section 7 of the IGST Act defines in detail the nature of supply. Accordingly, there are two types of supply under GST: inter-state supply and intra-state supply.

Inter-State Supply

Subject to the provisions of section 10, following supply of goods or services shall be treated as Inter-State supply.

  1. Supply of goods where the location of the supplier and the place of supply are in:
    1. Two different states
    2. A State and a Union Territory
    3. Two Different Union Territories
  2. Goods imported into the territory of India. Provided such a supply crosses the customs frontiers of India.
  3. As per section 12, supply of services where location and the place of supply are in:
    1. Two Different States
    2. A State and a Union Territory
    3. Two Different Union Territories
  4. Services imported into the territory of India
  5. Supply of goods or services or both:
    1. When the supplier is located in India and the place of supply is outside India (Exports)
    2. To or by a Special Economic Zone (SEZ) Developer or a Special Economic Zone Unit
    3. In the taxable territory, not being an intra-State supply and not covered elsewhere in this section

The following table showcases the provisions regarding inter-state supply in a simple way:

Table depicting the provisions regarding inter-state supply under place of supply of goods under GST.

Intra-State Supply

Similarly, subject to the provisions of section 10, following supply of goods or services shall be treated as intra-state supply:

  1. Supply of goods where the location of the supplier and the place of supply of goods are in the same State or Union territory. However, such a supply shall not be treated as intra-state supply in the following cases :
    1. Supply of goods to or by an SEZ developer or unit
    2. Goods imported into the territory of India
    3. Supplies made to a foreign tourist leaving India
  2. Supply of services where the location of the supplier and the place of supply of services are in the same State or the same Union territory. However, such a supply shall not include supply of services to or by an SEZ developer or unit.

To help you understand the concept of intra-state supplies, the following table showcases different cases in a simple format.

Table depicting provisions regarding intrastate supply in case of place of supply of goods under gst.

How does Place of Supply determine GST?

Both location of the supplier as well as the place of supply are considered to determine the type of GST. Accordingly, there can be following possibilities:

  • The first case is where the location of supplier and place of supply is in the same state. That is it is an intra-state transaction. In such a case, a combination of CGST and SGCT is applicable.
  • The second scenario is where the location of supplier and place of supply is in two different states. That is it is an interstate transaction. In such a case, IGST is applicable.
  • The next scenrio is the one where the buyer (export) or supplier (import) is a foreign entity. Again, such a transaction is treated as an interstate transaction. And in this case, IGST is applicable.
  • The last scenario is where there is transfer of stock between two branches of a business located in two different states. Such a transfer is deemed as an inter-state transaction. And in this case IGST is applicable. However, no GST is applicable if there is transfer of stock between two branches of a business located in the same state

Also Read:

What is Supply Under GST
Time of Supply Under GST
What is Value of Supply?
Composite Supply Under GST
What is Mixed Supply?

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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