Place of Supply under GST – Key Driver to the new regime

December 07,2015
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Pratik Shah, Partner, SKP Business Consulting LLP
Jigar Doshi, Associate Director
Sunny Kachalia, Manager

Under Indirect Tax laws, the taxable event plays a crucial role in determining levy of taxes such as Excise is applicable on manufacture of goods, Value Added Tax (VAT) is applicable on sale of goods, Service Tax is applicable on provision of service, etc. The advent of Goods and Services Tax (GST) will result in shift of these concepts learnt over the years and the taxable event would be ‘supply’ instead of manufacture/sale. Place of Supply Rules for goods and services will play a pivotal role in determining the place of supply – i.e. whether supply would be taxed based on the delivery of the goods, location of service recipient, location of service provider, location of property, based on place of performance, etc. Accordingly under GST, much awaited clarity is expected as to how the Place of Supply Rules would be and how the same will impact the transactions of the businesses apart from the GST Law itself. Recently, Finance Ministry had invited suggestions to sought views from the industry to determine the place of supply for five sectors which includes much debated e-commerce and banking services.

On 3rd December 2015, the Model GST Law submitted by one of the sub-Committee of the Government to All the State Finance Ministers was made available on one of the State Commercial Tax Dept's webportal[1]and in this article we have analysed the impact of the Place of Supply under GST as per the Model GST Law. It is worthwhile to note that Place of supply of goods and services is specified in the Law itself and there are no separate Rules per sepublished on the same. However it is mentioned that in case that the place of supply cannot be determined as per the provisions (sub-sections) then the same shall be determined by the Parliament in the accordance in the recommendations of the Council.


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