Place of Supply of Goods

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.

Understanding Place of Supply: Movement of Goods

Intra-state sale (same state):

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 Mumbai (Maharashtra) sells goods to Individual or business in Pune (Maharashtra)
The place of supply would be Maharashtra and same state CGST & SGST would be charged.

Inter-state sale (different state):

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 Bengaluru (Karnataka) sells goods to Individual or business in Chennai (Tamil Nadu).
The place of supply would be Tamil Nadu. Since it's a different place IGST will be charged.

3rd party delivery:

Example 1:
Vinod having business in Hyderabad (Telangana) sells goods to Akash in Delhi but Akash requests to send the goods to Kolkata (West Bengal).
It would be assumed that the goods have been received by Akash in Delhi and IGST will be charged. However, the place of supply would be Delhi.

Example 2:
‍Vinod having business in Hyderabad (Telangana) sells goods to Akash in Hyderabad (Telangana) but Akash requests to send the goods to Bengaluru (Karnataka).
It would be assumed that the goods have been received by Akash in Telangana and CGST and SGST of same state would be charged irrespective of the goods shipping location.

E-commerce sale:

Example:
Mr. Raj of Mumbai, Maharashtra orders a mobile from Amazon to be delivered to his mother in Lucknow (UP) as a gift. M/s ABC (online seller registered in Gujarat) processes the order and sends the mobile accordingly and Mr. Raj is billed by Amazon. It will be assumed that the buyer in Mumbai has received the goods & IGST will be charged. Place of supply: Mumbai, Maharashtra GST: IGST

No movement of goods/ services:

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.

Updated on:

July 19, 2024