Last updated on July 17th, 2017 at 10:01 am
Under GST, specific rules have been laid down for determining the place of supply of telecommunication services and financial services. Knowing how to determine the place of supply is very important to ensure that the correct tax is charged on a supply. Let us understand how to determine the place of supply of telecommunication services and financial services.
Telecommunication services include the services of telephone, internet, data transfer, broadcasting, cable, DTH (Direct to home) services, etc. For determining place of supply, telecommunication services are divided into 3 categories:
Type of servicePlace of supplyExampleServices provided using fixed telecommunication line, leased circuits, internet leased circuits, cable or dish antennaLocation where the telecommunication line, leased circuit, cable connection or dish antenna is installedMr. Rajesh, a resident of Madhya Pradesh, purchases a dish antenna from Leo DTH, a company providing DTH services, registered in Madhya Pradesh. The DTH is installed in Mr. Rajesh’s home.
Location of supplier: Madhya Pradesh
Place of supply: Madhya Pradesh
This is an intrastate supply and the taxes applicable are CGST + SGSTPostpaid mobile connectionBilling address of the recipient on the records of the supplierMr. Sarathi in Andhra Pradesh is using a postpaid mobile connection, for which the billing address is of his parents in Karnataka. The mobile connection is of RT Telecom, registered in Karnataka.
Location of supplier: Karnataka
Place of supply: The billing address of the postpaid mobile connection is Karnataka. Hence, the place of supply is Karnataka.
This is an intrastate supply and the taxes applicable are CGST + SGST.Prepaid mobile connectionWhen supplied by a selling agent/re-seller/distributor of the supplier
Address of the selling agent /re-seller/distributor as per the records of the supplier at the time of supplyRadha Recharges, a registered retailer in Tamil Nadu, supplies a prepaid recharge voucher of RT Telecom to a customer.
Location of supplier: Tamil Nadu
Place of supply: The place of supply is the address of Radha Recharges, i.e. Tamil Nadu.
Hence, this is an intrastate supply and the taxes applicable are CGST+ SGST.When recharge is done through internet banking or other electronic modes of payment
Location of the recipient in the records of the supplierMs. Lakshmi in Puducherry does a prepaid recharge of her RT Telecom mobile connection. The recharge is done from RT Telecom’s website and payment is done using credit card. RT Telecom is registered in Puducherry and Ms. Lakshmi’s location in the records of RT Telecom is Puducherry.
Location of supplier: Puducherry
Place of supply: Puducherry
This is an intrastate supply and the taxes applicable are CGST + SGST.
Financial services are divided into 2 categories:
Type of serviceType of recipientPlace of supplyExampleInsurance servicesRegistered personLocation of the recipientAllen Fire Insurance Corporation, registered in Uttar Pradesh, provides fire insurances services to Ganesh Hardware, registered in Uttar Pradesh
Location of supplier: Uttar Pradesh
Place of supply: Uttar Pradesh
This is an intrastate supply and the taxes applicable are CGST + SGSTUnregistered personLocation of the recipient in the records of the supplierAllen Fire Insurance Corporation, registered in Uttar Pradesh, provides fire insurances services to an unregistered person, Mr. Rahul, whose address in the records of Allen Fire Insurance Corporation is in Uttar Pradesh.
Location of supplier: Uttar Pradesh
Place of supply: Uttar Pradesh
This is an intrastate supply and the taxes applicable are CGST + SGSTBanking and other financial servicesNot applicableLocation of the recipient in the records of the supplier
If the location of the recipient is not in the records of the supplier, place of supply will be the location of the supplierMs. Mona, residing in Maharashtra, has an account in Shri Surya Co-operative bank, registered in Gujarat. In the records of the bank, the address of Ms. Mona is of her parents’ home in Gujarat.
For the banking service provided by Shri Surya Co-operative bank,
Location of supplier: Gujarat
Place of supply: Gujarat
This is an intrastate supply and the taxes applicable are CGST + SGST
As you can observe, in all the cases of telecommunication and financial services, the supply is intrastate. This is because service providers will now need to register in every state where they supply taxable services.
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