Supply is a fundamental concept that includes all the provisions of the goods and service tax around it. Place of supply under GST defines whether the transaction will be considered as intra-state or inter-state and accordingly, the credibility of tax such as CGST and SGST will be levied.
Place of supply includes:
- Location of supplier, which is the registered place of the supplier’s business
- Place of supply which refers to the registered place of business of the recipient.
Types Of Supply Transactions
There are two types of supply transactions that take place under GST, namely:
- Domestic transactions
These transactions take place when both the supplier as well as the recipient of service are in India. It can be sub-categorised as Inter-state transactions and Intra-State transactions. Generally, the place of supply for services will be in location of the service recipient who needs to be a registered person. In times when service is provided to an unregistered person, the place of supply will be the location of the service recipient or otherwise in the location of service provider.
- International transactions
This transaction basically takes place either when the service recipient or provider is outside India. The place of supply for services treated under Transactions will be at the location of service recipient and in case the service recipient’s location is not available, the place of supply will be in the location of the supplier.
Determining The Place Of Supply Of Services
The goods and service tax is also a destination based tax wherein taxes will be levied where foods and services are consumed. Under GST, IGST, SGST and CGST, taxes based on the place of supply will be levied. IGST is levied where transaction is inter-state while CGST and SGST are levied on intra-state transactions.
In order to understand place of supply, two fundamental concepts are intrinsically connected namely:
Location Of The Recipient Of Services
|A supply is received at a place of business for which the registration has been obtained||Place of business|
|A supply is received at a place other than the registered place of business. Eg: (A fixed establishment elsewhere)||Fixed establishment|
|A supply is received at more than one establishment, whether the place of business or at a fixed establishment||Establishment most directly concerned with the receipt of the supply|
|Absence of such places||Usual place of residence of the recipient|
Location Of The Supplier Of Services
|A supply is made from a place of business and has obtained registration||Such place of business|
|A supply is made from a place other than the registered place of business. Eg. (a fixed establishment elsewhere)||Fixed establishment|
|A supply is made from more than a single establishment, whether the place of business or fixed establishment||Establishment most directly concerned with the provision of supply|
|Absence of such places||Place of residence of the supplier|
The GST is said to be a game-changer for the Indian economy as determining the place of supply will segment it on the basis of product worth. This procedure will further levy other taxes like CGST and SGST.
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