What Is the Place of Supply Under GST?
Under the Goods and Services Tax (GST) law, the place of supply is the location that determines the tax treatment of a transaction. It helps decide whether a transaction is:
- Intra-State supply – generally subject to CGST + SGST/UTGST
- Inter-State supply – generally subject to IGST
Getting the place of supply wrong can result in charging the wrong type of GST and may create compliance issues for the business.
General Rule for Services
Unlike goods, services are intangible. Determining their place of supply is more detailed because it depends on the status of the customer (B2B vs B2C) and customer location records:
B2B Services (To Registered Person)
The place of supply is generally the location of the recipient.
B2C Services (To Unregistered Person)
The place of supply is generally the location of the recipient where that address is available in the supplier's records. In other cases, it is the location of the supplier.
12 Special Rules for Specific Services
Under Section 12 of the IGST Act, the general rule is overridden by special provisions for specific service categories:
1 Services Related to Immovable Property
For services directly related to an immovable property (architectural, interior design, surveying, engineering, construction, estate agents, hotel accommodation, event organization at a property), the place of supply is the location of the property.
Practical Examples
Designer Example: An interior designer in Maharashtra provides design services for a property in Goa. The place of supply is Goa.
Hotel Example: A Delhi company books a hotel conference facility in Mumbai. Place of supply = Maharashtra (property location).
Proviso: If the immovable property is located outside India, the place of supply is the location of the recipient.
2 Restaurant and Catering Services
For restaurant and catering services, the place of supply is the location where the service is actually performed.
Practical Examples
Restaurant: A Karnataka resident has dinner at a restaurant in Maharashtra. Place of supply = Maharashtra.
Catering: A Gujarat caterer provides services at a wedding event in Rajasthan. Place of supply = Rajasthan.
3 Personal Grooming, Fitness, and Beauty Treatments
Services involving hair cutting, salon treatments, spaying, personal training, health fitness, and cosmetic/plastic surgeries follow the actual performance rule: the place of supply is where the service is actually performed.
Practical Example
A Delhi customer visits a salon in Mumbai for a haircut. The place of supply is Maharashtra.
4 Events and Admission to Events
The GST law differentiates between admission to events and organization of events:
Rules & Examples
A. Admission to an Event: Always the location where the event is actually held (e.g., ticket for a match in Mumbai is subject to Maharashtra place of supply).
B. Organisation of an Event:
- B2B: Location of the registered recipient.
- B2C: Location where the event is actually held (if held outside India, the place of supply is the recipient's location).
5 Transportation of Goods
For transportation of goods, including mail or courier services, the place of supply depends on recipient registration:
- B2B: Location of the registered recipient.
- B2C: Location where the goods are handed over for transportation.
Example: A courier company picks up a parcel from an unregistered customer in Pune for delivery to Hyderabad. Place of supply = Maharashtra.
6 Passenger Transportation Services
For passenger travel (rail, air, road, water), the place of supply rules are:
- B2B: Location of the registered person.
- B2C: Location where the passenger embarks on the conveyance for a continuous journey.
Note: A return journey is treated as a separate journey, even if the onward and return tickets are issued together.
7 Banking and Financial Services
For banking, financial, and stock-broking services, the place of supply is the location of the recipient in the supplier's records. If the recipient's address is not available in the records, the place of supply is the location of the supplier.
8 Insurance Services
For insurance policies, the place of supply is:
- B2B: Location of the registered recipient.
- B2C: Location of the recipient recorded in the insurance supplier's records.
9 Telecommunication Services
Telecom services involve fixed lines, mobile, internet leased circuits, cable, and DTH:
A. Fixed Lines / Circuits / Cable / DTH: Location where connection is installed.
B. Post-Paid Connections: Billing address of the recipient recorded by the supplier.
C. Prepaid Connections: via distributor/agent -> address of the distributor/agent; directly (payment counter) -> where payment is received/voucher is sold; online recharges -> location of the recipient recorded by the supplier.
10 Services Provided on Board a Conveyance
For services supplied on board a vessel, aircraft, train, or motor vehicle, the place of supply is the location of the first scheduled point of departure of that conveyance for the journey.
11 Place of Supply for Export of Services
A transaction qualifies as an export of services (zero-rated supply, tax-exempt) when the following statutory conditions are met:
- The supplier of service is located in India.
- The recipient of service is located outside India.
- The place of supply of service is outside India (determined as per Section 13).
- Payment is received in convertible foreign exchange or permitted Indian Rupees.
- The supplier and recipient are not merely establishments of a distinct person.
12 Place of Supply for Imports
For services imported into India, the place of supply is the location of the recipient of the services.
Conclusion
The Place of Supply under GST is a key concept that helps determine the correct GST treatment of a transaction. While the rules for goods are often easier to understand, services can involve several special provisions.
Businesses should always check the nature of the supply, location of the supplier, location of the recipient and applicable place-of-supply rule before issuing a GST invoice.
Correctly determining the place of supply helps businesses charge the right GST, maintain accurate records and reduce the risk of GST compliance issues.
Get Your Place of Supply Determinations Correct
Incorrectly identifying the place of supply can lead to unnecessary tax disputes, penalties, and blocked working capital. Consult our GST professionals to audit your billing setup.
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Disclaimer:
The information provided in this document is for general awareness on the Place of Supply under GST. Tax provisions are subject to statutory amendments. Readers are advised to consult a qualified Chartered Accountant before executing tax claims.