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Place of supply plays a crucial role under GST to determine the nature of supply whether it is Intra State Supply or Inter State Supply and the tax is to be paid in accordance with nature of supply, If the supply is Intra state then CGST and SGST shall be applicable and If the supply is Interstate then only IGST shall be paid.
There are mainly two major factors to determine the nature of supply as follows-
Location of Supplier
Location of the Place of Supply
Location of Supplier is determined as per the registered address of the supplier and Place of supply is determined as per sections 10,11,12 and 13 of the IGST Act, 2017
Place of Supply of Goods other than supply of goods imported into or exported from India is determined as per Section 10 of IGST Act, 2017.
Place of Supply of goods imported into, or exported from India is determined as per Section 11 of IGST Act, 2017.
Place of supply of services where location of supplier and recipient is in India is determined as per Section 12 of IGST Act, 2017
Place of supply of services where location of supplier or location of recipient is outside India is determined by Section 13 of IGST Act, 2017.
A detailed discussion on the Place of Supply of Goods is given below:-
Place of Supply of goods, when there is movement of goods involved shall be the location where the movement of goods terminated for delivery to the recipient.
For example-Mr. A of Mumbai, Maharashtra sells 10 TV sets to Mr. B of Nagpur, Maharashtra.
The place of supply is Nagpur in Maharashtra. Since it is the same state CGST & SGST will be charged.
Where the goods are delivered by the supplier to a recipient or any other person on the direction of a third person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to the goods or otherwise, it shall be deemed that the said third person has received the goods and the place of supply of such goods shall be the principal place of business of such person.
For example- Mr. A in Lucknow buys goods from Mr. B in Mumbai (Maharashtra). The buyer requests the seller to send the goods to Nagpur (Maharashtra).
In this case, it will be assumed that the buyer in Lucknow has received the goods & IGST will be charged, In this case the place of supply is Lucknow (UP).
Place of supply shall be the location of such goods at the time of the delivery to the recipient.
For example- X Ltd. (Chennai) opens a new showroom in Bangalore. It purchases a building for a showroom from XYZ (Bangalore) along with pre-installed workstations, In this case the place of supply: Bangalore and accordingly CGST & SGST applicable.
There is no movement of goods (work stations), so the place of supply will be the location of such goods at the time of delivery (handing over) to the receiver.
Where the goods are assembled or installed at site, the place of supply shall be the place of such installation or assembly.
For Example- A Ltd. (Jharkhand) asks M/s XYZ Constructions (West Bengal) to build a blast furnace in their Jharkhand steel plant. The Place of supply: Jharkhand and accordingly CGST & SGST will apply.
Although M/s XYZ is in West Bengal, the goods (blast furnace) is being installed at a site in Jharkhand which will be the place of supply.
Where the goods are supplied on board a conveyance, including a vessel, an aircraft, a train or a motor vehicle, the place of supply shall be the location at which such goods are taken on board.
Example- Mr. A is travelling from Mumbai to Delhi by air. He purchases coffee and snacks while on the plane. The airline is registered in both Mumbai and Delhi.
Place of supply: Mumbai & accordingly CGST & SGST shall apply.
The food items were loaded into the plane at Mumbai. So, the place of supply becomes Mumbai.
The place of supply of goods,—
Imported into India shall be the location of the importer.
Exported from India shall be the location outside India.
If the tax is paid under the wrong head, means tax was to be paid as IGST but due to wrong determination the same (tax) had been paid in account of CGST and SGST and vice-versa, then there is no such provision in the GST to adjust such mistake with one another suo moto. The only remedy available with the person is to pay the tax in the correct account and get a refund of the tax which had been paid in the wrong account. Therefore, it is utmost necessary for the person to determine the correct nature of supply and pay the tax accordingly in the correct head.
In case Tax is charged under wrong head i.e.; if IGST is to be charged but CGST & SGST is charged, error will be thrown by the WEBGST Software. You can change the head under which taxes is charged and file your return error free.
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Want to know in detail about Web-GST, then feel free to ask us by sending an email to email@example.com or by simply commenting to this article.