An important concept is the Place of Supply under GST. It is a significant concept, as only after the determination such place of supply it can be determined whether CGST and SGST will be levied or IGST will be levied. This difference in the payment of GST is due to interstate or intrastate supply of goods or services. explanation about the such interstate and intrastate is given in Chapter V of Integrated Goods and Service Tax Act 2017. In this mentioned chapter following sections specify the conditions involving different category of goods and services:
- Section 10 provides information relating to a place of supply of goods which are to be imported to or exported from India.
- Section 11 provides information relating to the place of supply of all the other remaining goods.
- Section 12 provides information relating to the place of supply of services where the location of supplier and recipient is within India itself.
- Section 13 provides information relating to the place of supply of services where a location of either supplier or recipient is outside India i.e. in any foreign country.
In the case of determination of Place of supply of goods a basic general rule is applied. Goods and Service Tax (GST) is known to be a destination based tax i.e. tax benefit would be enjoyed by the authorities of the Consumer state. Taxing authority of the final place of consumption i.e. where the goods or services have been consumed will collect the taxes and not the state where the goods have been produced.
When will IGST be levied
IGST stands for Integrated Goods and Service Tax .when the goods are supplied from one state to another, in that case, Integrated Goods and Service Tax (IGST) will be levied.
When will CGST and SGST be levied
CGST stands for Central Goods and Service Tax and SGST stands for State Goods and Service Tax .If the goods are supplied inside one state i.e. the supplier and recipient of goods are positioned inside the boundaries of a single state, in that case, Central Goods and Service Tax and State Goods and Service Tax will be imposed. Both of these taxes are synchronized in nature, i.e. they are taxed jointly.
Though, there are certain rules coupled with the concept of a place of supply, and it is not determined just based on this general rule.Company Vakil provides all services relating to GST from GST registration to filling in just a days time.
Rules concerning Determination of Place of Supply
Rules concerning movement of goods
At First, let’s discuss the cases concerning movement of goods from one place to another. If the supply of goods involves movement either by the hand of supplier or recipient or by any other party, then the place of supply will be the place of goods at the time of the end of such movement.
If there is no movement involved, then the place of supply will be the place of goods when they are supplied to the consumer.
When any 3rd party is involved
In the second situation, when any 3rd party or mediator participates in the supply of goods. If any 3rd party instructs to deliver the goods to the recipient of any other person either before the start or during the movement of the goods, then it is assumed that the goods are received by such 3rd person. And the primary place of business of such 3rd party will be understood as the place of supply of such goods.
When Installation forms a part of supply
When the supply of goods consists of installation or assembly of the goods, then the place where such goods are assembled or installed would be considered as the place of supply.
Supply on board a transportation
If any goods are sold on board a conveyance, then location of supply will be deemed to be the location where such goods were boarded on the conveyance. Such conveyance may include a vessel, aircraft, train, motor vehicle, etc.
Place of Supply where Import/Export is involved.
We have covered every situation where the supplier and recipient are situated in India. Now, we will discuss about the situations when either supplier or recipient is situated outside India.
In the case of Exports: place of a recipient will be outside India; thus the place of supply will be outside India. And as the place of supply is outside India, where the Indian authorities have no jurisdiction they are thus Zero rated.
In the case of Imports: Place of supply in case of imports is the place of Importer. And they are taxable, as the importer is situated in India.