Place of supply of Services relating to Domestic Transactions under GST
Detailed Analysis on place of Supply of Services under GST
DETAILED ANALYSIS ON PLACE OF SUPPLY OF SERVICES UNDER GST
Place of supply of Services under GST is a very important concept and it guides as to which tax i.e. CGST/SGST or IGST has to be charged in respect of the particular supply.
The provision of a place of supply of services is covered under Section 12 & 13 of the CGST Act.
These can be broadly divided into two parts :
1. Provisions of the place of supply of services in case of International transactions i.e. Imports and Exports
2. Provisions of the place of supply of services in case of Domestic Transactions
First, we shall discuss the provisions relating to the place of supply of services under Domestic Transactions i.e. within India.
1. Place of Supply of Services relating to Domestic Transactions :
As per Section 12 of the Act, there are some specific rules and there is a general rule to determine the place of supply of services.
As per general rule, the place of supply of services will be governed by this rule if it does not fall under any other specific rules provided.
Now we will discuss what is the general rule :
1. If the receiver of service is a registered person under GST, the place of supply of services will be the location of the receiver.
2. If the receiver of services is unregistered, the place of supply of services will be :
(a) If the address of the unregistered person is available to the supplier, the place of supply of services will be the location of the unregistered person
(b) If the address of the unregistered person is not available to the supplier, the place of supply of services will be the location of the supplier
Let us understand the above provision with the help of examples :
(a) Mr. A, a consultant residing in Delhi provides services to his client who is registered at Lucknow, U.P. In this case the place of supply of services will be Uttar Pradesh and the transaction will be subject to IGST.
(b) Mr. B a consultant residing and registered in Mumbai provides consultancy services to Mr. C (unregistered person) located at Delhi. In this case, if the address of Mr. C is available then the services will be inter-state and place of supply will be Delhi and if the address of Mr. C is not available to Mr. B then the place of supply of services will be Mumbai only and it will be intra-state services liable to CGST/SGST.
Specific Rules :
Having discussed the general rule, now we will discuss specific rules relating to the place of supply of services under GST.
(1) Services in relating to an Immovable Property:
There are many services provided which are related to Immovable Property such as lodging, accommodation in a hotel, boat, or vessel or performing an event or social function i.e. marriage, etc. in an immovable property, or services relating to architect for drawing/designing, etc. relating to construction of the immovable property.
In all such supply of services, the location of the immovable property will be the place of supply of services.
However, if the place of location of immovable property is outside India, the place of supply of services will be the location of the receiver.
Summary :
Location of Property is in India - Place of supply will be the location of Immovable Property
Location of Property is outside India - Place of supply will be the location of the recipient
Examples :
1.Mr. Nitin, Architect in Delhi provides designing services relating to Immovable Property proposed to be constructed in Mumbai. Here the place of supply of services will be Mumbai as the property is located in Mumbai.
2. Mr. X visits Banglore and stays at Hotel Y at Banglore for business purposes. Here the services provided by the Hotel relating to accommodation services will be at Banglore i.e. location of the Hotel only.
However, there are instances where the immovable property is located in more than one state. Then how to determine the place of supply of services about these services.
Here as per rule, the place of supply of services will be in proportion to each state as per the terms of the contract or agreement.
If there is no such contract or agreement, the place of supply of services will be determined as per rule 4 of IGST rules which is as under :
(a) Services in relation to accommodation in a hotel, inn, or guesthouse
Place of supply will be determined in the proportion of no. of nights spent by the guest in each state
(b) In relation to services provided by way of organizing of functions, marriage, parties, etc. in respect of immovable properties which are located in more than one state.
Place of supply will be determined in proportion to the area of Immovable property lying in each state
(c) In relation to service provided by housing boat or vessel by way of accommodation
Place of supply will be determined in proportion to the time spent by the boat/vessel in each state which should be backed by the declaration of the service provider
(2) Fitness, Beauty and Health Services, Restaurant and Catering Services
In respect of all the above services i.e. Fitness related, Beauty and Health treatment services including plastic and cosmetic services, and restaurant services/catering services, the place of supply of services will be the location of the place where these services are actually performed.
Example :
Mr. Ram visits Mumbai for business purposes and goes to a restaurant for lunch. In this case, the restaurant services are performed in Mumbai and hence the place of services will be Mumbai only.
(3) Training and Performance Appraisal Services
The place of supply of Training and Performance appraisal services provided to :
(a) The registered person will be the location of that person.
(b) unregistered persons will be the place where the services are actually performed.
Example :
A consultant firm located in Chennai provides training to the employees of a company registered at Patna, Bihar. The training is provided at the office of the consultant firm in Chennai. In this case, since the company is registered at Patna, the place of supply of services will be at Patna even though the training is performed in Chennai.
In the above example, if the company at Patna is unregistered, then the place of supply of services will be at Chennai i.e. where the training has been performed.
(4) Services provided by way of admission to cultural, artistic, sporting, scientific, educational or entertainment event or amusement park
In relation to services provided by admission to any :
(i) Cultural (ii) Artistic (iii) Sporting (iv) Scientific (v) Educational or (vi) Entertainment Event or Amusement park will be the place where the event is actually held or where the park or such other place is located.
(5) Services relating to the organization of Events
Where any service is provided in relating to the organizing of any cultural, artistic, sporting, scientific, educational, or entertainment event including the supply of services in relation to a conference, fair, exhibition, or celebration of such events, the place of supply of services will be :
(i) location of the person if the same is provided to a registered person
(ii) the place where the event is actually held if the same is provided to an unregistered person
(ii) location of the recipient if the event is held outside India.
(6) Supply of Services by way of transportation of goods including by way of mail or courier
The place of supply of services by way of transportation of goods including by way of mail or courier will be :
(a) the location of the person if the services are provided to a registered person
(b) the location at which the goods are handed over to the transporter if the same is to an unregistered person
(c) If the goods are transported outside India, the place of supply will be the destination of such goods
Example :
1. Mr. A of Kanpur being registered person couriers some goods to Mr. B of Patna. In this case, the place of supply of services through courier will be Patna since Mr. B is registered.
(7) Passenger Transportation Services
The place of supply of passenger transportation services will be :
(a) If provided to a registered person, it will be the location of that person
(b) If provided to an unregistered person, it shall be the place where the person boards the conveyance for a continuous journey
(8) Services on board a conveyance including a vessel, an aircraft, a train, or a motor vehicle :
When services are provided onboard a conveyance including a vessel, an aircraft, a train, or a motor vehicle, the place of supply of services will be the location of the first scheduled point of departure of that conveyance for the journey.
For example, Mr. X boards an aircraft from Delhi in a Delhi - Chennai flight. During the flight, he demands services of watching a Hindi Bollywood Movie. The place of supply of this service will be the first scheduled point of departure of this flight which is Delhi.
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(9) Telecommunication Services :
Telecommunication Services are divided into three categories :
(a) Services provided using Fixed Communication lines, leased circuits, internet leased circuits, cable or DTH Connections :
In this case, the place of supply of services will be the location where the fixed telecommunications lines, leased circuits, internet leased circuits, cable, or DTH is installed for receipt of services.
(b) Services in relation to Postpaid mobile connection and internet Services :
In these cases, the place of supply of services will be :
(a) The location of the billing address of the recipient of services if the address is available in the records of the supplier
(b) Location of the supplier of services if the address is not available.
(c) Services in relation to Pre-paid mobile connections, internet services and DTH services (recharge coupons, voucher packs, net packs)
In the above case, the place of supply of services will be determined as under :
(I) If the service is provided through a selling agent, reseller, or distributor of SIM or recharge card, the place of supply will be the address of the selling agent, reseller, or distributor at the time of supply.
(ii) If the service is provided by any person to the final subscriber, the place of supply will be the location where the payment is received or such vouchers are sold.
(iii) In case of pre-payment services provided through internet banking or other electronic modes of payment, the place of supply will be the location of the recipient of services in the records of the supplier of services.
(iv) In any other case, the place of supply will be the address of the recipient in the records of the supplier, or in case the address is not available, it will be the location of the supplier of services.
(10) Financial and Stock Broking Services
The place of supply of banking and Stockbroking services to any person will be :
(I) the location of the recipient of services in the records of the supplier of services
(ii) If the location of the recipient is not available, it will be the location of supplier of services
For Example,
(1) Mr. Jatin based at Kolkatta buys shares through a broker based in Delhi. Here the place of supply will be Kolkatta.
(2) Mr. Ram based in Delhi withdraws money from the ATM of the bank of Baroda at Pune. The place of supply of services will be Delhi since Mr. Ram is based in Delhi which is the location of the recipient of services.
(11) Insurance Services
The place of supply of services in case of Insurance services will be :
(i) Location of the recipient when the recipient is a registered person
(ii) It will be the location of the recipient of services in the records of the supplier when the services are provided to an unregistered person.
(12) Advertisement Services provided to the Government
When advertisement services are provided to the Central/State Government/ Statutory body/local authority meant for the state/UT, the place of supply of services will be each of the states/UT where the advertisement is run/published/broadcasted/played or disseminated.
The value of such supplies specific to each state/UT will be in proportionate to the amount attributable to the services provided in respective state/UT as per the terms of the contract/agreement.
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