1. General Rule: When Place of supply can’t be determined through any of the specific cases discussed in point 2 to 9, then Place of supply shall be:
Location of recipient of services
2. Performance-based services: Services that requires physical presence of goods or person on which services are to be performed.
Place of supply for the services which requires the physical presence of goods or the person on whom the services are to be performed shall be the place where services are actually performed
For example, ABC Private Limited of Mumbai imports machinery from the USA. To install such machinery ABC Private Limited takes the service of an engineer from the USA. The Place of supply for service of installation of machinery provided by such engineer shall be the place where such service is performed i.e., Mumbai
For example, if Miss Nikita, a makeup artist travels to Malaysia to provide makeup services to Miss Rachel, the place of supply shall be the location where services are actually performed i.e., Malaysia.
However, when services are supplied from a remote location through electronic means, then the location of such goods at the time of performance of Service shall be the Place of supply.
For example, a computer company located in Germany takes the service of an Indian software company located in Bangalore for the installation of software in its computers. The Place of supply shall be the location of the computer i.e., Germany
Provided that the services applied in respect of goods temporarily imported into India for repairs or for any other treatment or process and are exported after such repair, treatment, or process without being put to use in India, then the Place of supply shall be the location of the recipient and if the location of recipient is not available then the location of the supplier.
For example, FB Private Limited imported machinery from Dubai for repairing the same. After the repairs are completed, the machinery is exported back to Dubai without being put to use in India, the Place of supply in this case shall be Dubai.
When services are provided in more than one territory including the taxable territory then the Place of supply for the whole invoice value shall be the location of the taxable territory.
For example, Mr. Ross, a German engineer gets a contract to install machinery in the various plants of ABC Limited located in New Delhi, London, and Moscow. Mr. Ross issues a single invoice to ABC Limited for installation in all three locations. The Place of supply for services of installation in all three countries shall be the location of taxable territory i.e., New Delhi.
When services are performed on persons located in different states or Union Territory of taxable territory, value of services supplied, shall be apportioned according to the Generally Accepted Accounting principle.
When services are performed on goods located in different state or union territory and goods are of similar kind, the value of services supplied shall be equally apportioned to each state or union territory in which such goods are located.
However, when services are performed on goods located in different states or union territory are of different types, then value of services applied shall be apportioned on the basis of invoice value of goods.
3. Services in relation to immovable property:
Services directly provide in relation to immovable property such as
Service of state agent
Construction and related services
Accommodation by a hotel in guest house, club, or camp site
Services of architect or interior decorators etc
The Place of supply in these cases shall be the location of immovable property
For example, Mr Lakshya, a civil engineer provides services to Mahavir Associates in relation to construction of their immovable property located in Jaipur, then Place of supply shall be the location of property i.e., Jaipur
However, if such services are provided in more than one territory under one invoice including a location in taxable territory, then Place of supply for services provided in all territory shall be the location in taxable territory
For example, Mr. Lakshya, a civil engineer, provides services to DLF for residential projects in Delhi, New York and Tokyo under one invoice. The Place of supply for services provided by Mr. Lakshya in each country shall be location in taxable territory i.e., Delhi.
If services in relation to immovable property is supplied in more than one state or union territory, then the value of services applied shall be apportioned in each state or union territory in following manner:
In case where services provided by way of lodging accommodation by hotel in guest house etc and related services: Number of nights stayed in such property of each state.
For example, Hotel chain Club Mahindra charges are consolidated some of rupees 100000 in its 3 establishments situated in Delhi Haridwar and Shimla the stay in Delhi is for two nights the stay in Shimla is for one night and the stay in Agra is also for one night the value of services i.e., rupees 100000 shall be proportionate in the ratio of 2:1:1 two Union Territory of Delhi Uttar Pradesh and Himachal Pradesh
In case where services are provided by way of closing accommodation by a houseboat or vessel and its related service: Time spend by boat or vessel in each state or union territory which shall be determine on the basis of declaration made by service provider.
All the other cases for service related to immovable property including the case when one single property is located in more than one state: The value of services applied shall be apportioned in the proportion of area of such immovable property.
4. The Place of supply for the following services shall be always the location of supplier of services
Banking or financial services to its account holders
Services consisting of hiring of transport including yours but excluding aircraft and vessels, up to period of 1 month
For example, Mr. A, an agent of Surat facilitates supply of goods between foreign customer and Indian sellers. The Place of supply shall be location of supplier of services i.e., Surat
For example, Mr. A hires a yacht from a France based company based in Paris for 22 days. The Place of supply is the location of supplier of services i.e., Paris.
5. The Place of supply for transportation of goods other than by way of male or courier shall be the destination of such goods
For example, A shipping company transports a shipment of garments from Surat to Nairobi, Kenya. The Place of supply shall be destination of goods i.e., Nairobi
6. Passenger transportation services
Place of supply for passenger transportation services shall be the place where passenger embarks on the conveyance. In this case return journey is considered as continuous supply. If multiple journeys are done, first place of embarking of passenger shall we considered as Place of supply.
For example, Mr. Shubham embarks on a flight from Mumbai to Dubai and further from Dubai to New York. Here the place of supply shall be the first place of embarking i.e., Mumbai.
7. Services provided on board a conveyance during passenger transport:
Place of supply in this case shall be first scheduled point of departure. For example, Mr. Abhishek, travelling from Mumbai to London by a flight of Air India, orders a movie on the flight. The place of supply of service of providing movie on flights shall be the first scheduled point of departure i.e., Mumbai.
8. The Place of supply for OIDAR services shall be the location of recipient of services.
However, recipient of such services accesses such services online. Therefore, it is difficult to determine the location of recipient. Explanation to this subsection lays down seven condition and on satisfying any two conditions of such seven condition the service recipient is deemed to be located in India. Following are the conditions
Recipient given Indian address
Payment is settled by an Indian credit card, debit card or other card.
The recipient has an Indian billing address.
The system used by recipient has an Indian IP address.
The recipient uses an Indian Bank account for payment.
The country code of sim card used by recipient of services is of India.
The recipient receives the service through an Indian fixed landline.
9. In case of notified services place of supply shall be Place of Effective use/enjoyment i.e., location of recipient. Following are the notified services:
Research and development services related to Pharmaceutical Sector supplied by a person located in taxable territory to a person located in Non-taxable territory.
Repair and Maintenance, overhaul services in respect of aircraft, aircraft engines or components or parts supplied to a person for use in furtherance of business.
Repair and Maintenance, overhaul services in respect of vessel, vessel engines or components or parts supplied to a person for use in furtherance of business.
CA Pranay Jain is a young and aspiring Chartered accountant. He qualified Chartered Accountancy Course in 2021 and has a well-established practice in various fields of taxation and auditing, with his core area of practice being in the field of litigation i.e., handling assessment and appeal-related matters and representing assesses before various tax departments.
He is also socially active on LinkedIn at linkedin.com/in/capranayjain
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