Place of Supply under GST

The place of supply is the location that GST law assigns to a supply to identify its destination for taxation. Under the Integrated Goods and Services Tax Act, 2017, a transaction is generally classified by comparing the supplier’s location with the legally determined place of supply, subject to special rules.

The basic classification test

Under Sections 7 and 8 of the IGST Act, the supplier’s location and place of supply determine whether a supply is inter-State or intra-State. The customer’s billing address or the supplier’s registration alone does not settle the classification.

• A supply is generally intra-State when the supplier’s location and place of supply are in the same State or the same Union territory.
• A supply is generally inter-State when these locations are in different States, different Union territories, or a State and a Union territory.
• Inter-State supplies attract IGST; intra-State supplies attract CGST together with SGST or UTGST, as applicable.

Determining the place of supply

The Act provides separate rules for goods and services. The place of supply is a statutory determination, not necessarily the place where an invoice is issued or payment is received.

• For goods involving movement, Section 10 generally places the supply where movement terminates for delivery to the recipient.
• For goods without movement, the place of supply is generally the goods’ location when delivered to the recipient.
• Under the bill-to, ship-to rule, delivery on a third person’s direction generally makes that person’s principal place of business the place of supply.
• For services where both supplier and recipient are in India, Section 12 generally uses the registered recipient’s location.
• For an unregistered service recipient, the general rule uses the recipient’s location if an address exists on record; otherwise, it uses the supplier’s location.
• Specific service rules override these defaults: services directly related to immovable property generally use the property’s location.

Special inter-State treatment

Some supplies receive inter-State treatment despite what a simple same-State comparison might suggest.

• Supplies to or by a Special Economic Zone developer or unit are inter-State supplies, even when both locations are in the same State.
• Imported goods are treated as inter-State supplies until they cross India’s customs frontiers; imported services also receive inter-State treatment.
• Where the supplier is located in India and the place of supply is outside India, the supply is inter-State.
• Section 13 generally governs the place of supply of services when either the supplier or recipient is outside India.