Section 13 shall be applicable for determination for GST place of supply of service when then location of the recipient of service or the location of the supplier of service is outside India i.e. either the supplier or the recipient of service is located outside India. For any service provider, as crucial as it is to compute the taxes accurately and discharge the tax liabilities on time, it is of equal importance to ascertain whether the tax has to be paid as IGST or CGST and SGST/UTGST which is determined by the sections governing the Place of Supply of services under GST.
Section 12 v/s Section 13 – Place of supply of services under GST
Place of supply provisions in the GST law have been laid down in two distinct categories that are governed by the two distinct sections – Section 12 and 13. Section 12 of the IGST Act, 2017 governs the place of supply of services under GST where the location of the supplier as well as the recipient in within India.
However, Section 13 shall be applicable for determination for GST place of supply of service when then location of the recipient of service or the location of the supplier of service is outside India i.e. either the supplier or the recipient of service is located outside India. The provisions of Section 13 determine the import and export of services in various types of supply of services.
For GST place of supply of service – Section 13
The detailed analysis of the section with examples is as under:-
General Provisions – Section 13(2)
Transaction – For any case, where the service is not covered from Section 13(3) to 13(13)
(a) If the location of the recipient of service is available in the ordinary course of business
For GST place of supply of service – Location of the recipient of service
(b) If the location of the recipient of service is not available in the ordinary course of business
For GST place of supply of service – Location of the supplier of service.
Performance Based Services – Section 13(3)
Transaction 1 – Services supplied in respect of goods, which are required to be made physically available by the recipient of services to the supplier of services, or to a person acting on behalf of the supplier of services in order to provide the services.
For GST place of supply of service – Location where the services are actually performed.
Example – M/s XYZ Ltd. from New Delhi has been engaged to provide testing services to the spare parts of cars. XYZ will have to perform the testing work in the car factory located in Ludhiana. Here, for GST place of supply of service will be Ludhiana i.e. the location where the services are actually performed.
Transaction 2 – Services supplied in respect of goods, where the services are provided from a remote location by way of electronic means.
For GST place of supply of service – Location where the goods are situated at the time of supply of services.
Example – M/s XYZ Ltd. from New Delhi has repaired laptops for M/s ABC Ltd. of Mumbai remotely by using Team Viewer. Here, the place of supply of services will be Mumbai, i.e., where the goods are situated at the time of supply of services.
Transaction 3 – Services supplied in respect of goods which are temporarily imported into India for repairs or treatment or process and are exported after such repairs or treatment or process without being put to any use in India, other than that which is required for such repairs or treatment or process.
For GST place of supply of service – Provisions of Section 13(3) will not be applicable and the place of supply will be determined as per Section 13(2).
Example – M/s ABC Ltd. has been engaged for providing services of cutting and polishing on unpolished diamonds which will be temporarily imported into India from Hong Kong and then exported back to Hong Kong once the process is done without the diamonds being put to any use in India. Here, for GST place of supply of service will be Hong Kong as per the provisions of Section 13(2).
Transaction 4 – Services supplied to an individual, represented either as the recipient of services or a person acting on behalf of the recipient, which require the physical presence of the recipient or the person acting on his behalf, with the supplier for the supply of services.
For GST place of supply of service – Location where the services are actually performed.
However, where the services are provided in more than one location including a location in the taxable territory, then the provisions of Section 13(6) will be applicable.
Further, where the services are provided in more than State or Union Territory, then the provisions of Section 13(7) read with Rule 7 of the IGST Rules, 2017will be applicable.
Services related to immovable property – Section 13(4)
Transaction – Services supplied directly in relation to an immovable property, including services supplied in regard by experts and estate agents, supply of accommodation by way 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 that of architects or interior decorators.
For GST place of supply of service – Place where the immovable property is located or is intended to be located.
Example – Mr. Shiva from Jaipur has been engaged by Mr. Khan from Singapore for providing architecture services for his property in Sri Lanka. Here, for GST place of supply of service will be Sri Lanka i.e. the place where the immovable property is located or is intended to be located.
However, where the services are provided in more than one location including a location in the taxable territory, then the provisions of Section 13(6) will be applicable. Further, where the services are provided in more than State or Union Territory, then the provisions of Section 13(7) read with Rule 8 of the IGST Rules, 2017 will be applicable.
Services relating to events – Section 13(5)
Transaction – Services supplied by way of admission to, or organization of a cultural, artistic, sporting, scientific, educational or entertainment event, or a celebration, conference, fair, exhibition or similar events, and of services ancillary to such admission or organization.
For GST place of supply of service – Place where the event is actually held.
Example – A talent hunt show in USA is conducting auditions in India for which it has engaged a talent agency from Mumbai for auditions in Mumbai and New Delhi. Here, the place of supply of service under GST will be Mumbai and New Delhi i.e. the place where the event is actually held.
However, where the services are provided in more than one location including a location in the taxable territory, then the provisions of Section 13(6) will be applicable.
Further, where the services are provided in more than State or Union Territory, then the provisions of Section 13(7) read with Rule 9 of the IGST Rules, 2017 will be applicable.
Services provided at more than one location – Section 13(6)
Transaction – Where any performance based services u/s 13(3), services related to immovable property u/s 13(4), or services relating to events u/s Section 13(5), is supplied at more than one location, including a location in the taxable territory.
For GST place of supply of service – Location in the taxable territory.
Example – Mr. Shiva from Jaipur has been engaged by Mr. Khan from Singapore for providing architecture services for his property in Sri Lanka and in Varanasi for which he has charged a consolidated amount as his fees. Here, the place of supply of service under GST will be Varanasi i.e. the location in the taxable territory.
Services provided in more than one State or Union Territory – Section 13(7)
This section is applicable when any performance based services u/s 13(3), services related to immovable property u/s 13(4), or services relating to events u/s Section 13(5), is supplied at more than one State or Union territory.
(a) Value of such services separately collected or determined in terms of the contract or agreement entered into in this regard
For GST place of supply of service – Location as per the proportion of services as per the contract.
(b) In absence of such contract or agreement for Performance Based Services u/s 13(3), Services related to immovable property u/s 13(4) or Services relating to events u/s Section 13(5)
For GST place of supply of service – As per Rule 7 of IGST Rules, 2017, Rule 8 of IGST Rules, 2017 or Rule 9 of IGST Rules, 2017 respectively.
Specified Services – Section 13(8)
This section covers the services supplied by banks, NBFCs and intermediaries.
Here, for GST place of supply of service is the location of the supplier of services. The services included in this section are as under:-
- Services supplied by a banking company, or a financial institution, or a non-banking financial company, to account holders.
Explanation:-
- “Account” means an account bearing interest to the depositor and includes a non-resident external account and a non-resident ordinary account.
- “Banking company” shall have the same meaning as assigned to it under Section 45A(a) of the Reserve Bank of India Act, 1934.
- “Financial Institution” shall have the same meaning as assigned to it in Section 45-I(c) of the Reserve Bank of India Act, 1934.
- “Non-banking financial company” means a financial institution which is a company, a non-banking financial institution which is a company and which has as its principal business the receiving of deposits, under any scheme or arrangement or in any other manner, or lending in any manner, or such other non-banking institution or class of such institutions, as the Reserve Bank of India may, with the previous approval of the Central Government and by notification in the Official Gazette, specify.
- Intermediary services – 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 or both or securities on his own account.
- Services consisting of hiring of means of transport, including yachts but excluding aircrafts and vessels, upto a period of one month.
Services of transportation of goods, other than by way of mail or courier – Section 13(9)
Transaction – Services of transportation of goods, other than by way of mail or courier.
Place of supply of service under GST – Place of destination of such goods.
Section 13(9) of the IGST Act, 2017 has been omitted vide Section 162 of the Finance Act, 2023 which will come into effect from 01.10.2023. After this amendment, for GST place of supply of service of transportation of goods will be as per the provisions in the default section i.e. Section 13(2) of the IGST Act, 2017.
Passenger Transportation Services – Section 13(10)
For GST place of supply of service is the place where the passenger embarks on the conveyance for a continuous journey.
Example – Mr. A is travelling by Sunday Superfast Express from Kota to New Delhi covering 2 states. Here, the place of supply of services under GST is Kota i.e. the place where the passenger embarks on the conveyance for a continuous journey.
Services provided on board – Section 13(11)
Transaction – 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.
For GST place of supply of service – First scheduled point of departure of that conveyance for the journey.
Example – M/s Neon Enterprises is providing services on Sunday Superfast Express from Kota to New Delhi covering 2 states. Here, the place of supply of services under GST is Kota i.e. the first scheduled point of departure of that conveyance for the journey.
OIDAR Services – Section 13(12)
Transaction – Supply of online information and database access or retrieval services (OIDAR services).
For GST place of supply of service – Location of the recipient of services.
To know more, read OIDAR Services.
Power of Government to notify – Section 13(13)
In order to prevent double taxation or non-taxation of the supply of a service, or for the uniform application of rules, the Government shall have the power to notify any description of services or circumstances in which the place of supply shall be the place of effective use and enjoyment of a service.