Module 6: Place of Supply & Inter/Intra-State Transactions – Advance GST Course
📦 Place of Supply for Goods under GST
The place of supply for goods depends on whether the movement of goods is involved.
1️⃣ When Movement is Involved
Rule: Place of supply is the location where goods terminate after movement.
✅ Example:
Pune-based seller ships machinery to a buyer in Delhi.
👉 Place of Supply = Delhi → Inter-State Supply → IGST
2️⃣ When No Movement is Involved
Rule: Place of supply is the location where goods are handed over to the recipient.
✅ Example:
Buyer picks up goods from the seller’s warehouse in Gujarat.
👉 Place of Supply = Gujarat → Intra-State if both in Gujarat
3️⃣ Delivery to Third Party (Bill-to-Ship-to)
Rule: Place of supply = location of the third party to whom the invoice is billed.
✅ Example:
A (Maharashtra) orders goods to be delivered to B (Karnataka) but billed to C (Delhi).
👉 Place of Supply = Delhi
🧾 Place of Supply for Services under GST
The rules for services are more complex and depend on location of supplier and recipient.
General Rule
If both are in India:
- Registered recipient: Place of supply = location of recipient
- Unregistered recipient: Place of supply = location of recipient, if address is available, else supplier's location
Special Scenarios
| Service Type | Place of Supply |
|---|---|
| Real estate-related services | Where the immovable property is located |
| Event organization | Location of event |
| Transport of goods (domestic) | Recipient’s location |
| Transport of passengers | Place of embarkation |
| Banking, financial & insurance | Location of recipient (if available) |
| Online database & software services | Location of recipient |
🌐 Cross-Border Supply of Services
When either the supplier or recipient is outside India, the following conditions must be satisfied for it to qualify as export of services (zero-rated):
Export of Service – 5 Conditions:
- Supplier is in India
- Recipient is outside India
- Place of supply is outside India
- Payment received in convertible foreign exchange (or INR under RBI approval)
- Supplier and recipient are not merely establishments of the same person
✅ Example:
A Mumbai-based IT firm provides cloud services to a U.S. company and receives USD payment.
👉 Zero-rated export – No GST charged
📌 Important: Such exports must be made under LUT/Bond or with IGST payment for refund claim.
🔄 Inter-State vs Intra-State Transactions
| Type | Taxes Applicable | When Applicable |
|---|---|---|
| Intra-State | CGST + SGST | Buyer & seller in same state |
| Inter-State | IGST | Buyer & seller in different states / supplies to SEZ / exports/imports |
🏭 Industry-Wise Examples
🏢 Construction Industry:
Place of supply is where the property is located. Even if client is in another state, GST is charged in the state where the building is.
🚛 Logistics Companies:
Freight services – place of supply is the recipient’s location. For unregistered recipients, it may default to supplier’s location.
👨💻 Freelance IT Services:
If service is exported (foreign client + payment in USD), place of supply is outside India → zero-rated.
⚠️ Common Errors to Avoid
| Mistake | Impact |
|---|---|
| Misidentifying location of recipient | Wrong tax charged (CGST/SGST vs IGST) |
| Ignoring PoS rules for services | Refund claims may get rejected |
| Wrong treatment of exports | Missed zero-rated benefit & refund |
| Not issuing invoice with correct PoS | GSTR-1 mismatches |
🧾 Latest Updates (FY 2024–25)
- Cross-border B2C service reporting to be separately disclosed in GSTR-1
- Enhanced scrutiny on IGST refunds for incorrect place of supply
- API-enabled e-invoicing now includes PoS field validation
📝 Final Thoughts
Understanding Place of Supply is critical to ensuring correct GST reporting and tax payment. It directly affects whether IGST or CGST+SGST applies, impacts refund eligibility, and plays a key role in compliance for businesses with multi-state or international operations.
📣 Need Help with Place of Supply Analysis?
At Verotus Finlegal Solutions LLP, we provide:
- Customized GST training for your business type
- One-on-one consulting on PoS-related issues
- Filing GST returns with accurate inter/intra classification
- Export & SEZ refund assistance
📍 Based in Kolhapur, Maharashtra
🌐 Visit: www.verotusllp.com
📞 Call: +91-7066336680
