Place of supply in case of export or import of goods/services
Export of goods with its grammatical variations and cognate expressions, means taking goods out of India to a place outside India;
Export of service means
- The supplier of service is located in India
- The recipient of service is located outside India
- The place of supply of service is outside India
- The payment for such service has been received by the supplier in convertible foreign exchange and
- The supplier of service and recipient of service are not branch and HO of the same taxable person.
The supply of goods or services to the following would be treated as exports under GST
- Supply made to a SEZ unit/SEZ developer
- Supply made to an Export Oriented Undertaking (EOU)
General Rule for place of supply for exports
- The place of supply of goods exported from India shall be the location outside India.
- Since export of goods or services is considered as a zero-rated supply, GST will not be levied on export of any kind of goods or services.
Import of goods
Supply of goods imported into the territory of India, till they cross the customs frontiers of India, shall be treated to be a supply of goods in the course of inter-state trade or commerce. Thus IGST is applicable on imports.
Import of services means
- The supplier of service is located outside India
- The recipient of service is located in India and
- The place of supply of service is in India.
General rule for place of supply of imports
The place of supply of goods imported into India shall be the location of the importer.
Specific rules for place of supply of certain services
- Services supplied partly in India and partly outside India
Where any service is supplied at more than one location, including a location in the taxable territory, its place of supply shall be the location in the taxable territory.
- Service supplied in more than one State in India
The place of supply of such services shall be taken as being in each of the respective states/UT and the value for services separately collected or determined in terms of the contract or on such other basis as prescribed.
- Place of supply in case of performance on goods made available by service recipient
- In case of services supplied in respect of goods which are required to be made physically available by the recipient to the supplier, the place of supply shall be the location where the services are actually performed.
- Where such services are provided from a remote location by way of electronic means, the place of supply shall be the location where goods are situated at the time of supply of service.
- In case of service supplied in respect of goods that are temporarily imported into India for repairs and are exported after repairs without being out to any other use, the place of supply will be the location of recipient of service.
- Services covered under performance related services
- Maintenance and repair service provided within territorial waters to marine vessels owned by foreign companies (even if located within SEZ) is not export of service even if payment is received in foreign exchange.
- Maintenance or repair service provided in India in respect of products of a foreign company is not export of service as service in provided and delivered in India.
- Services where physical presence of person is required
In case of services supplied to an individual, represented either as the recipient or a person acting on behalf of the recipient, which require their physical presence, with the supplier for the supply of service, the place of supply shall be the location where the services are actually performed.
Eg. cosmetic or plastic surgery, beauty treatment services, personal security service, health and fitness services, photography service, internet cafe service, classroom teaching, etc.
- Services directly in relation to immovable property
The place of supply of services supplied directly in relation to an immovable property, including services supplied in this regard by experts and estate agents, supply of accommodation by a hotel, inn, guest house, club or campsite by whatever name called, grant of rights to use immovable property, services for carrying out or co-ordination of construction work, including architects or interior decorators, shall be the place where the immovable property is located.
- Services relating to admission or organisation of events
The place of supply of services supplied by way of admission to or organisation of a cultural, artistic, sporting, scientific, educational, entertainment event or a celebration, conference, fair, exhibition or similar events and of services ancillary to such admission, shall be the place where the event is actually held.
- Services supplied by Bank, NBFC or Financial Institution to account holders
In case of services supplied by the aforesaid, the place of supply shall be the location of the supplier of service.
- Services by intermediary i.e., commission agent
In case of intermediary services, the place of supply shall be the location of the supplier of service.
“Intermediary means a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons but does not include a person who supplies such goods or services on his own account.
Following are the guiding principles to determine whether a person is acting as an intermediary:
- Nature and value – an intermediary cannot alter the nature or value of the service, the supply of which he facilitates on behalf of his principal.
- Separation of value – the value of an intermediary’s service is invariably identifiable from the main supply of service that he is arranging. It can be based on an agreed percentage of the sale or purchase price generally referred to as commission.
- Identity and title – The service provided by the intermediary on behalf of the principal are clearly identifiable.
- Services of freight forwarder
When the freight forwarder acts on his own account – when a freight forwarder provides domestic transportation within taxable territory as well as international freight service under a single contract on his own account and charges a consolidated amount to the exporter, this is a service of transportation of goods for which the place of supply is the destination of goods. Since the destination of goods is outside the taxable territory, this service will not attract tax. Here it is presumed that ancillary freight services such as loading, unloading, etc., are “bundled” with the principal service owing to a single contract or single price.
On an import shipment with similar conditions, the place of supply will be in the taxable territory and so service tax will be attracted.
When freight forwarder acts as intermediary – the place of provision will be his location. Tax will be payable on the services provided by him, However, when he provides services to an exporter of goods, the exporter can claim refund of service tax paid under notification for this purpose.
- Services of hiring of means of transport
In case of services consisting of hiring of means of transport, including yachts but excluding aircraft and vessels, upto a period of one month, the place of supply shall be the location of the supplier of service.
- Service of transportation of goods
The place of supply of services of transportation of goods, other than by way of mail or courier, shall be the place of destination of goods.
- Service of transportation of passengers
The place of supply in respect of a passenger transportation services shall be the place where the passenger embarks on the conveyance for a continuous journey.
- Services on board a conveyance
Place of supply of services provided on board a conveyance during the course of a passenger transport operation including services intended to be wholly or substantially consumed while on board, shall be the first scheduled point of departure.
- Online Information and database access or retrieval services (OIDAR)
The place of supply of the OIDAR services shall be the location of the recipient of service. For this purpose, person receiving such services shall be deemed to be located in the taxable territory if any two of the following non-contradictory conditions are satisfied:
- The location of address presented by the recipient of service via internet is in taxable territory.
- The credit card, debit card or any other card by which the recipient of service settles payment has been issued in the taxable territory.
- The billing address of recipient is in taxable territory.
- The internet protocol address of the device used by the recipient is in the taxable territory.
- The bank of recipient in which the account used for payment is maintained in the taxable territory.
- The country code of the SIM card used by the recipient is of taxable territory.
- The location of the fixed landline through which the service is received by the recipient is in taxable territory.
- Residuary provision:
Except in case of specified services discussed above, the place of supply of services shall be the location of the recipient of service. However, in case the location of the recipient of service is not available in the ordinary course of business, the place of supply shall be the location of the supplier of service.