How to Determine Place of Supply

-

How to Determine Place of Supply

‘Place of Supply’ under GST is an important factor as it defines whether the transaction will be counted as intra- state (i.e within the same state) or inter-state (i.e. between two states) and accordingly the changeability of tax, i.e levy of SGST, CGST & IGST will be determined. While determining the levy of taxes based on place of supply, two things are considered:
  • Location of Supplier: It is the registered place of business of the supplier
  • Place Of Supply: It is the registered place of business of the recipient
Let’s understand this with the help of two examples
Example 1: Determining Place of Supply for Intra-State Supply of Goods
Let us assume there is a supplier of craft products, Kloud Kreations Pvt. Ltd with the registered office in Bangalore, Karnataka. It supplies goods to schools in Manipal, Karnataka. Here, since the supplier as well as the recipient are located in same state i.e Karnataka, it will be counted as 'Intra-State Supply Of Goods’ and hence SGST and CGST will be levied.

Example 2: Determining Place of Supply for Inter-State Supply of Goods
Let us assume the supplier of craft products, Kloud Kreations Pvt. Ltd has their registered office in Bangalore, Karnataka and the recipient i.e Delhi Public School is located in Jaipur, Rajasthan. Here, since the supplier and the recipient are located in different states i.e Karnataka and Rajasthan, it will be counted as ‘Inter-State Supply Of Goods’ and hence IGST will be levied.
There are specific provisions for determination of place of supply of goods which depend on:
  • The place of supply of goods: where the supply involves movement of goods
  • The place of supply of goods: where the supply involves no movement of goods
  • The place of supply of goods: in case of export and import of goods

Calculating Place of Supply of Services under GST

Let us first understand why an accurate determination of place of supply is important for businesses. The reasons for this are listed below:
  • Wrong classification of supply between interstate or intra-state and vice-versa may lead to hardship to the taxpayer as per section 19 of IGST Act and section 70 of CGST Act
  • Where wrong taxes have been paid on the basis of the wrong classification, refund will have to be claimed by the taxpayer
  • The taxpayer will have to pay the correct tax along with interest for delay on the basis of revised/correct classification
  • Also, correct determination of place of supply will help us in knowing the incidence of tax. As if place of supply is determined as a place outside India, then tax will not have to be paid on that transaction


Comments

Post a Comment

Ads

Popular posts from this blog

What is SGST, CGST, and IGST? $ When is Tax Levied?

-
Image
WHAT IS SGST, CGST, AND IGST? Suppose goods worth INR 10,000 are sold by manufacturer A in Maharashtra to Dealer B in Maharashtra. B resells them to trader C in Rajasthan for INR 17,500. Trader C finally sells to End User D in Rajasthan for INR 30,000. Suppose CGST= 9%, SGST=9%. Then, IGST= 9+9=18% Since A is selling this to B in Maharashtra itself, it is an intra- state sale and both CGST and SGST will apply, at the rate of 9% each. B (Maharashtra) is selling to C (Rajasthan). Since it is an interstate sale, IGST at the rate of 18% will apply. C (Rajasthan) is selling to D also in Rajasthan. Once again it is an intra-state sale and both CGST and SGST will apply, at the rate of 9% each. *** Any IGST credit will first be applied to set off IGST then CGST. Balance will be applied to setoff SGST. Since, GST is a consumption based tax, i.e., the state where the goods were consumed will collect GST. By that logic, Maharashtra (where goods were sold) should not get any taxes. ...
Read more

Interview : Student Cleared IPCC after 9 Attempts

-
Interview : Student Cleared IPCC after 9 Attempts Mr.Govind has cleared his CA IPCC after multiple attempts. He as agreed to give a short interview on his prolonged success. Whats your reaction when you finally cleared the exam? I can’t describe my feelings in words. I have been waiting for that moment for 4 years and that should the happiest moment in my life. Did you face any pressure from your family or friends to move on and take up any other course? No, my family and friends have been extremely supportive through this entire episode. The only pressure i faced is from my relatives and neighbours.  Every Diwali they kept asking me what am I doing and for the past 4 years, and I have been telling them the same answer and few made me feel very embarrassed. Then i realized that, People who care about you don't laugh at you. If they are laughing at you, they don't care about you and so, ignore them in the first place. What went wrong in your previous attempt? What cha...
Read more

Topper Interview Nov. 2016

-
Image
CA IPCC Topper Interview Nov 2016 (Rekha Suthar) Speaking on her success, Ms. Rekha has stated that, following ICAI Study Materials and Practice Manuals have helped here succeed in the CA IPCC Exams. Most important point you should remember while preparing for Taxation is, NEVER READ A BULK OF SYLLABUS IN A SINGLE DAY. Taxation is a tricky subject who should be prepared over a period of time. Don’t finish topics in a single stretch. For that day you may feel like you got that but after a week, everything comes to the starting point. Slow and Steady. How are you feeling right now? It is a surprising moment for me and I am extremely happy for it. How did you hear this news that you are AIR Rank 1 & what was your parent’s reaction? I am not the first one to know that I am the topper. I actually came to know about it through my professor. Who called me and shared this. He was very proud. My mom started crying and my father was shocked when they heard this from me....
Read more