The Goods and Service Tax Act was introduced as a destination based tax i.e. the state in which the goods consumed have the right to collect the amount of tax so it becomes critical to decide in which state the goods have been consumed and consequently who should collect the amount of tax. For solving this issue the concept of ‘Place of Supply’ was introduced both for goods and services.
Place of Supply when there is movement of goods
Supply | Place of Supply |
Involves movement of goods, whether by the supplier or the recipient or by any other person | Location of the goods when the movement of goods terminates for delivery to the recipient |
Goods are delivered by the seller to a recipient on a direction of a third person, (whether agent or not) before or during movement of goods, by way of transfer of documents of title to the goods or some other way. | It is assumed that the third person has received the goods and the place of supply of such goods will be the principal of business of 3rd person. |
Place of Supply when there is no movement of goods
Supply | Place of Supply |
No movement of goods, either by the supplier or the recipient | Location of such goods at the time of the delivery to the recipient (at the time of transfer of ownership) |
The goods are assembled or installed at site | Place of such installation or assembly |
Place of supply of goods under GST defines whether the transaction will be counted as intra-state or inter-state, and accordingly levy of SGST, CGST & IGST will be determined. It is governed by section 10 of the IGST Act.
Section 10: Place of Supply of goods other than imported into or exported from India
There could be situations where words in the law may not be defined as delivery but the gist coming from the provisions is something different as the receiver of goods is defined as the person who pays for the goods. Since the government has not come out with new rules to specify place of supply in situations other than the previous ones, it is important to interpret and come to a harmonious conclusion.
If you are looking to keep yourself updated about the recent compliances or requires assistance in filing of GST returns, GST assessments and GST audits, our team of experts can assist you in complying with the GST regime.
We can also assist you in setting up your business in India, accounting, bookkeeping, payroll, auditing, taxation, secretarial compliances, and trademark registration, business structuring and advisory services. If you require any assistance in this regard, kindly click here