How Is The Place Of Supply Determined For Intra-State Supplies?

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Published Date:  12-12-2023   Author:   saayak-karmakar
captainbiz how is the place of supply determined for intra state supplies

In the intra-supply or the GST, the place of supply indicates where the goods or the product is being received. The location of the supply is the primary factor in deciding whether your nature of supply is import-export, intra-state, or interstate. Finding out the nature of supply helps one understand which type of tax they must pay to the government.

For example, if the supply is interstate, then IGST is levied, and if the intra-state supply is in nature, then the combination of SGST and CGST will be applied.  

Determining Place of Supply in Intra-State Transactions

If you want to determine the tax liability of a transaction, you need two crucial locations of the transaction, which are —

  • Supplier Location 
  • Place of Supply

The registered location of the supplier or the location from where the products or services are supplied is known as the supplier location.

The place of supply is where the recipient receives the product or service. However, there are some exceptions, as stated in IGST sections 12 and 13 and sections 10 and 11 (for goods). According to these laws, the place of supply can be different.

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Factors Influencing Place Of Supply For Intra-State Supplies

Several factors influence the place of supply for intra-state supplies, and these factors are —

  • When two places are involved in the transaction of the goods, then the place of supply for this specific transaction will be considered the final place because the recipient will ultimately receive the products. 
  • Suppose an intermediary is involved in the transaction of the goods. In that case, it means if the seller is taking the help of a third person to supply the goods to the customer, then the third party’s location will be considered as the place of supply. In this case, the location where the goods are delivered will not be considered the place of supply. 
  • If the goods are moved from place to place during the transaction, the place where the goods will reach the recipient or the buyer will be the final place and be considered the place of supply. 
  • If the goods are getting assembled or installed in a place different than where they are handed to the recipient, then the place where they are assembled or installed will be the place of supply. 
  • If the transportation means of the transaction is either a bus, airplane, or ship, then the location where the goods are getting shipped into transport is considered the place of supply. 
  • If importation is in question and the products are imported to India from outside, then the importer’s location will be the place of supply. In case of exportation from India to outside of the country, the place where the goods are delivered will be the place of supply. 

Guidelines For Identifying The Place of Supply In Intra-State Trade

Here are some general guidelines when you have to identify the place of study in intra-state trade —-

  • If the person supplying the product and the person buying the product are both registered taxpayers, then the recipient’s location will be the place of supply for the goods being supplied.
  • When the person who is supplying the goods is a registered taxpayer, but the recipient is an unregistered taxpayer. The location of the purchaser will be considered as the place of supply. 
  • However, this is possible when the invoice shows the buyer’s address. If there is no address of the buyer mentioned, then the place of the supply will be the location of the supplier. 

Legal Considerations In Determining Place Of Supply For Intra-State Transactions

The provisions of the place of supply are in the IGST Act Chapter 5 from Section 10 to Section 14, which states the following aspects of the place of supply —

  • Section 10 – Place of supply of goods, excluding the supply of goods exported from or imported into India. 
  • Section 11 – Place of supply of goods, including the supply of goods exported from or imported into India. 
  • Section 12 – Place of supply of services where the recipient and the supplier’s location is in India.
  • Section 13 – Place of supply of services where the recipient or the supplier’s location is outside India.
  • Section 14 – Special provision regarding the tax payment by a seller with online information, retrieval services, and database access.

Those transactions where the place of supply can not be determined (those that don’t come under the GST laws provisions) will be prescribed a special manner by the government in which they can determine the place of supply.

If none of the above provisions apply to the transaction at hand, then with the recommendation of the GST council, the central government will set some rules for how the place of supply can be determined. 

Intra-State Supply Location Determination Process

The place of supply is nothing but the location where the supply product or services end up. The typical place of the supply determination process doesn’t take anything but the final location where the recipient is receiving the service or the goods.

To simplify it, if a transaction of goods is happening between Kolkata and Maharastra where the goods are benignly supplied from Kolkata to Maharastra, then the place of supply in this transaction is Maharastra. 

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Place Of Supply Determination For Intra-State Supplies

Service

Place of Supply

Insurance services The recipient’s address, mentioned in the invoice, is the place of supply.
Financial services like banking and stock broking The recipient’s location, but if the recipient’s location is not mentioned in the invoice, the supplier’s location is the place of supply.
Conveyance services like sea, air, road or rail The point where the service begins is the place of supply. 
Passenger Transport services If the supply is B to B, then the recipient’s location, and for supply from B to C, the place where the passenger got onboard the transportation medium is the place of supply
Goods transport services If the supply is B to B, then the recipient’s location, and for supply from B to C, the place where the goods are supplied is the place of supply.
Services related to managing events and organization If the supply is B to B, then the recipient’s location, and for supply from B to C, the place where the events are being held in the place of supply
Admission services that hold events like theatres and theme parks as well as educational, artistic and entertainment, etc The place where the event is being held is the place of supply. 
Services where the property is immovable, such as construction, house repairs, interior decoration, etc.  The place of supply is the immovable property’s location. 

Also Read: GST Interstate Vs Intrastate Supply: What Is The Difference

Conclusion 

As per GST law, if you are moving your stock from one place to another within the same state, that is also considered an intra-state supply, even though you are not technically selling your goods or services to others.

However, if the supply is intra-state, then you will not have to pay any GST for transferring your business stocks, but if you are moving them to a different state, you will have to pay the GST as interstate supply.

Also Read: What Are The Different Tax Rates That Apply To Different Places Of Supply?

FAQs

  • What is POS in GST and Intra-State Supply?

POS is the short form of the Place of Supply in Intra-state and GST Law. The place of supply is usually the recipient’s location of the transacted goods or services. 

  • What is section 12 about in GST provisions?

Section 12 of the GST provision law denotes the time of supply of goods. Usually, the payment date is the time of supply, but some exceptions exist. 

  • How do we determine the place of supply for immovable properties?

Since the property is immovable, the place of property becomes the place of supply. However, the nature of this type of supply is tagged as interstate supply, so the tax will be IGST.

  • What is an example of the place of supply in intra-state supply?

Suppose a transaction of goods is happening between Dhakuria and Park Circus, where the goods are being supplied from Park Circus to Dhakuria. In that case, the place of supply in this transaction is Dhakuria, and the nature of the supply is intra-state because the supply is occurring within one state, West Bengal. 

  • What is the place of supply in intra-state supply?

When a transaction of goods and services happens between two places within the same state, the place where the goods and services are supplied to, which is the recipient’s location, is the place of supply in intra-state supply. 

  • What is section 13 of the place of supply in intra-state supplies?

The place of supply section 13 indicates the services where the recipient or the supplier’s location is outside India. This means that either the supplier of the services or the recipient is outside the country, denoting the supply as an import-export.

  • How many types of supply are there in GST?

Under the GST law, there are 2 major categories where the goods and services can be categorized: non-taxable supplies and taxable supplies. These 2 types are then further divided into different categories based on the nature of their supply. For example, the taxable supplies are divided into inter-state, intra-state, and import-export categories. 

  • What is the POS under GST ICAI?

Under the GST ICAI, the place of supply is regarded as the destination or consumption principle. To simplify it, the place of supply is determined by the location of the consumption of the products or services. 

  • What is the principle supply under GST?

When the supply of goods and services is primarily comprised of composite supply, in this type of supply, all the other supplies that are part of the composite supply become ancillary. 

  • What is the place of supply for gyms or restaurants?

Services like restaurants and gyms fall under one category: personal grooming, catering services, beauty treatments, fitness, and health services. These supplies occur in the same place where they are provided, so the place of supply becomes the restaurant or gym.

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Saayak Karmakar

Hi, I am Saayak Karmakar. I am a freelance content writer with 7 + years of experience. I did my masters in Mass Communication from Guru Jambeswar University.

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