GST is a destination-based tax, which means that it is levied at the point of consumption rather than the place of origin. As a result, the state in which they are consumed will have the ability to collect GST. Therefore, the place of supply is critical under GST.
The place of supply of products under GST determines whether the transaction is intra-state or inter-state, and hence the levy of SGST, CGST, and IGST.
The supply of products or services within a same state or union territory is known as intra-state supply. CGST and SGST are attracted by intrastate supply.
Example: Vinod having business in Kolkata (West Bengal) and sells goods to Durgapur (West Bengal)
The place of supply would be West Bengal and same state CGST & SGST would be charged.
Inter-state supply attracts IGST. Various types of transactions as under can be classified as inter-state supply:
1. Supply of goods or services from one State or Union Territory to another State or Union Territory.
2. Import of goods or services.
3. Export of goods or services.
4. Supply of goods or services to or by SEZ.
5. Supplies to international tourists.
6. Any other supply which cannot be treated as intra-state supply.
Example: Vinod having business in West Bengal and sells goods to Tamil Nadu.
The place of supply would be Tamil Nadu. Since it's a different place IGST will be charged.
Vinod having business in Durgapur (West Bengal) and sells goods to Akash in Tamil Nadu but Akash requests to send the goods to Kolkata (West Bengal).
It would be assumed that the goods have been received by Akash in Tamil Nadu and IGST will be charged. However, the place of supply would be Tamil Nadu.
Vinod from Telangana buys mobile from Flipkart/ Amazon to be delivered to his sister in Delhi. The online seller registered in Delhi sends the order to Delhi.
The place of supply would be Telangana. It would be assumed that Vinod had received the order and IGST will be charged.
The location of the recipient shall act as the place of supply if the supplier provides the supply of service to a person registered under GST.
Sai Enterprises located in Telangana provides service to customer who is registered in Punjab. hence the place of supply would be the location of recipient that is Punjab.
In case the customer's location is not determinable, then the location of supplier (Sai Enterprises) i.e Telangana would be the place of supply.