While creating a GST invoice, it is important to identify the correct place of supply. Reason being, GST is a destination-based tax, which means, the type of tax is decided depending on the state of supply (also known as ‘Place of supply’).
Importance of Place of Supply
- If place of supply is different than the location of seller, it is called Inter-state supply. In this case, Integrated GST (IGST) is charged.
- If the place of supply is same as the location of the seller, it is called Intra-state supply. In this case, GST is divided equally between two heads – Central GST (CGST) and State GST (SGST). In case the place of supply is a union territory, SGST is replaced by Union Territory GST (UTGST).
This concept can be better understood using the following table.
|Intra-state Supply||Inter-state Supply|
|Supply of goods and services within the same state or union territorry||From one State or UT to another State or UT|
|Import or export of goods and services|
|Supply to or from SEZ|
|Supply to an international tourist|
Once you have understood how to identify the correct nature of supply, you can determine whether to use only IGST or CGST + SGST/UTGST in your GST invoice.
Determining the correct place of supply
Considering the fact that ‘Place of Supply’ has an important role to play in the GST calculation, it is very important that you mention it correctly in your invoice.
However, determining the correct place of supply is somewhat tricky. In the majority of the cases, it is the location of the buyer, but in some cases, it could be the location of the seller as well. In this article, we will discuss how to determine the correct place of supply.
Based on the regulations framed by GST Act, we have compiled an easy-to-understand table for you. You can view this information in details at CBIC portal.
|Sl. No.||Nature of supply||Place of supply|
|1||Movable goods (Whether supplied directly to buyer or supplied to a third party on instrcutions of buyer)||Location where buyer is registered|
|2||Immovable goods (e.g. selling a property)||Location of the goods itself|
|3||Movable goods sold in transit (eg. selling in flight, train etc.)||Location where products were loaded|
|4||B2B Services that can be delivered by electronic medium (Web development, online training etc.)||Location where buyer is registered|
|5||B2C Services that can be delivered by electronic medium (Web development, online training etc.)||Location where service is delivered|
|6||Personal care services (e.g. Hair cut, fitness training, health checkup etc.)||Location where service is delivered|
|7||Immovable property based services (e.g. hotel accomodation)||Location where service is delivered|
|8||Event-based services (Concert tickets, movie tickets, admission to amusement parks etc.)||Location where service is delivered|
|9||Transportation services (B2B)||Location where buyer is registered|
|10||Transportation services (B2C)||Beginning point of transportation|
|11||Import and export of goods and services||Location of buyer|
Place of Supply Examples
To further understand the concept of ‘Place of supply’ let’s go through the following examples:
|Sl. No.||Event||Place of Supply|
|1||Nigam Enterprises of Maharashtra, which is a manufacturer of Shoes, supplies 100 pc shoes to Anjali Footwears of Haryana. The product has been sent via road transport.||Haryana (Location of customer)|
|2||Nigam Enterprises of Maharashtra supplies 100 pc shoes to Anjali Footwears of Haryana on the instructions of Kamini Footwears of Uttar Pradesh. The product has been sent to Anjali Footwears via road transport, but bill is raised to Kamini Footwears.||Uttar Pradesh (Kamini Footwears will be assumed as actual buyer)|
|3||Mr. Aman Jain from Uttranchal boards a flight for Delhi from Mumbai. He buys meals when the flight is in air.||Mumbai (Meals were loaded in flight at Mumbai Airport)|
|4||Mr. Aman Jain from Uttranchal works at Nigam Enterprises which is located in Maharashtra. He buys a corporate flight ticket for a journey from Delhi to Orissa.||Mahrashtra (Location where B2B client is registered)|
|5||Ms. Rehana from Mumbai comes to Delhi to celebrate her summer vacation. She buys tickets for a concert in Delhi.||Delhi (Place where service is delivered)|