Place of Supply of Goods and Treatment of Ex-factory Supply: A Comprehensive Guide

As a small or medium business owner or startup founder, understanding the place of supply of goods and the treatment of ex-factory supply is crucial. In this comprehensive guide, we will discuss everything you need to know about these topics.

What is the Place of Supply of Goods?

The place of supply of goods is the location where the supply of goods is deemed to have taken place for tax purposes. This is important because it determines the type of tax that needs to be paid on the supply of goods.

The place of supply of goods is determined based on the type of supply and the location of the supplier and the recipient of the goods.

Types of Supply

There are two types of supply:

1. Intra-state supply: This is the supply of goods within a state.

2. Inter-state supply: This is the supply of goods between different states.

Place of Supply of Goods for Intra-state Supply

The place of supply of goods for intra-state supply is the location of the recipient of the goods. For example, if a business in Delhi supplies goods to a recipient in Mumbai, the place of supply of goods will be Mumbai.

Place of Supply of Goods for Inter-state Supply

The place of supply of goods for inter-state supply is determined based on the type of goods being supplied. There are two types of goods:

1. Movable goods: These are goods that can be physically moved. The place of supply of movable goods is the location of the recipient of the goods.

2. Immovable goods: These are goods that cannot be physically moved. The place of supply of immovable goods is the location of the goods.

Treatment of Ex-factory Supply

An ex-factory supply is a supply of goods where the supplier delivers the goods to the recipient at the factory gate. The recipient then takes ownership of the goods and is responsible for transporting them to their destination.

For tax purposes, an ex-factory supply is treated as an intra-state supply. This means that the place of supply of goods for an ex-factory supply is the location of the recipient of the goods.

Conclusion

Understanding the place of supply of goods and the treatment of ex-factory supply is important for small and medium business owners and startup founders. By understanding these concepts, you can ensure that you are paying the correct amount of tax on your supplies of goods.