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Concept & Definition of ‘PLACE OF SUPPLY’ Under GST Act. 2017

The concept of “Place of Supply” has paramount importance because of the very nature of the new taxation system of GST. As GST is a destination and consumption based tax, the place of supply is a crucial factor for Settlement of funds and cross utilization of Input Tax Credit on inputs and input services. At the outset, we need to understand the two types of the nature of supplies:

 

1. Intra-State Supply: If the place of supply of goods and/or services is within the State, such transaction is called Intra-State Supply and CGST and SGST/UTGST as the case may be, is levied by the Centre and State/UT Governments.

 

2. Inter-State Supply: In case the place of supply of goods and/or services is in the State other than the origin place of supply. Import and export of goods will also be an inter-State supply. In case of services where any of the recipient or supplier of service is outside India will also be an inter-State supply. IGST is levied and collected by the Central Govt. on such supplies.

 

Therefore, levy of CGST/SGST/UTGST or IGST is completely dependent upon the fact as to where be the Place of Supply. Thus, classification of supply either as intra-State or inter-State is crucial for correct levy of tax in GST. Place of supply is also important because determining it in certain cases of the supply of services is real difficult task. To understand the basics and the concept of the place of supply, following terms are important:

DEFINITIONS

Recipient of Supply of Goods :

As per Section 2(93) of the CGST Act, 2017 recipient of supply of goods or services or both, means-

(a)        where a consideration is payable for the supply of goods or services or both, the person who is liable to pay that consideration;

(b)       where no consideration is payable for the supply of goods, the person to whom the goods are delivered or made available, or to whom possession or use of the goods is given or made available; and

(c)        where no consideration is payable for the supply of a service, the person to whom the service is rendered,

and any reference to a person to whom a supply is made shall be construed as a reference to the recipient of the supply and shall include an agent acting as such on behalf of the recipient in relation to the goods or services or both supplied.

The location of the recipient of services

Sec. 2( 70) of CGST specify that - Location of the recipient of services means

(a)        where a supply is received at a place of business for which the registration has been obtained, the location of such place of business;

(b         where a supply is received at a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment;

(c)        where a supply is received at more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the receipt of the supply; and

(d)       in absence of such places, the location of the usual place of residence of the recipient.

Location of the supplier of services:

As per Sec. 2(71) of CGST Act- Location of the supplier of services means

(a)        where a supply is made from a place of business for which the registration has been obtained, the location of such place of business;

(b)       where a supply is made from a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment;

(c)        where a supply is made from more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the provisions of the supply; and

(d)       in absence of such places, the location of the usual place of residence of the supplier; (3) Location of the Recipient of Service.

Location of the Recipient of Services

As per section 2(14) of the IGST Act, 2017 “location of the recipient of services” means:

(a)        where a supply is received at a place of business for which the registration has been obtained, the location of such place of business;

(b)       where a supply is received at a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment;

(c)        where a supply is received at more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the receipt of the supply; and

(d)       in absence of such places, the location of the usual place of residence of the recipient.

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Concept & Definition of ‘PLACE OF SUPPLY’ Under GST Act. 2017
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