Place of Supply is a key concept under India’s Goods and Services Tax (GST) system. It helps determine which state or union territory gets the tax from a particular transaction. In simple terms, it tells you where a sale or service is considered to have happened for GST purposes.
Why is this important? Under GST, tax is divided into Central GST (CGST), State GST (SGST), and Integrated GST (IGST). If the Place of Supply is within the same state as the supplier, CGST and SGST apply. If it’s in a different state, IGST applies. This distinction matters for your GST filings, billing process, and ensuring tax is paid to the correct government authority.
For example, if your business is in Gujarat and you sell to a client in Maharashtra, the Place of Supply will decide whether you charge IGST or a combination of CGST and SGST.
Understanding the Place of Supply is essential for:
- Filing accurate GST returns
- Avoiding penalties due to incorrect tax application
- Registering for GST in the right state(s)
- Complying with audit and invoicing requirements
Small businesses and startups often overlook this, which can lead to confusion and compliance issues later on. Knowing the right Place of Supply ensures your GST practices are correct from the start.
For more guidance on GST compliance and services tailored to Indian businesses, you can visit FinTax24’s GST Solutions.