Today we at MyOnlineCA talking about Meaning of Interstate or Intrastate in GST.Under the GST system,there are two type of supplies. The tax you need to pay will be decided by the type of supply. A supply can be inter state or intra state supply. Section 7 of GST Act provide for inter state and intra state supplies. You need to determine the nature of supply before charging the tax. The tax you need to pay is dependent on nature of supply.Meaning of Interstate or Intrastate in GST

Lets take a look at the concept of Inter-State and Intra-state supplies under Goods and Service Tax.

What are inter-state and intra-state supplies under GST? What is their relevance?

GST is a levy on supply of goods or services. To levy GST, supplies are classified  into two categories which are inter-state supplies that refers to supplies from one state to another and intra-state supplies that refers to supplies within the state. When we talk about inter-state supplies, the Central Government will charge Integrated Tax under GST Act, 2017 whereas, in case of intra-state supplies, Central Government will charge Central Tax under CGST Act, 2017 and State Tax under SGST Act, 2017.

What are the criterion to conclude whether a supply is inter-state or intra-state?

To conclude whether a supply is inter-state or intra-state, two specifications  are relevant that are location of supplier and place of supply. If we take the case of domestic supplies, if the location of supplier and place of supply are in two different states, then the supply will be an inter-state supply and will  attract IGST and If the location of supplier and place of supply are in same State, then the supply will be called as intra-state supply will attract CGST and SGST. In case the supply is cross border supplies that is supplies by supplier who is located in India to a recipient that is  located outside India then this supply shall be treated as inter-state supplies.

What is the location of supplier and receiver?

The location of supplier is defined to mean a place of business for which registration has been obtained or the location of a fixed establishment in case where supply is made from unregistered place or the location of usual place of residence in cases where registered premises or fixed establishments are absent. The location of receiver is also defined in an identical manner to mean registered place of business, unregistered fixed establishment or the usual place of residence as the case may be. It is important to note that only location of supplier or receiver for services is defined.

In case of supplies of goods within India, how would we determine the place of supply?

GST is destination based tax which means tax will be charged where goods and services are consumed and will accrue to that state.

For understanding Place of Supply for Services the following two concepts are very important namely:

  • location of the recipient of services
  • location of the supplier of services

Let’s understand these two concepts in detail as they will form the base for determining the place of supply in case of supply of services:

Location of the recipient of services:

In the case where a supply is received at a place of business for which the registration has been obtained,Location of Reciever of Service will be place of business. In The Case where a supply is received at a place other than the place of business for which registration has been obtained,Location of Reciever of Service will be  fixed establishment. In The Case where a supply is received at more than one establishment, whether the place of business or fixed establishment,Location of Reciever of Service will be the location of the establishment most directly concerned with the receipt of the supply.In Case there is a absence of such places,Location of Reciever of Service will be the location of the usual place of residence of the recipient.

Location of the provider/supplier of services:

where a supply is made from a place of business for which the registration has been obtained,Location of Supplier of Services will be the location of such place of business.where a supply is made from a place other than the place of business for which registration has been obtained ,Location of Supplier of Services will be the location of such fixed establishment.where a supply is made from more than one establishment, whether the place of business or fixed establishment,Location of Supplier of Services will be the location of the establishment most directly concerned with the provision of the supply.In the absence of such places,Location of Supplier of Services will be the location of the usual place of residence of the supplier.

In case of cross border supply of goods, how would we determine the place of supply?

In case of goods imported into India, the place of supply shall be the location of the importer. In case of goods exported form India to a location outside India, the place of supply shall be such location outside India.

In case of services, how would you determine the place of supply?

The place of supply of services for domestic and cross-border services are provided in section 12 and section 13 respectively.

Does all cross-border supplies by a supplier in India are subject to GST?

No. In terms of section 16 of IGST Act, 2017, export of goods or services shall be treated as zero-rated. Accordingly, the said supplies can be exported without payment of any GST if Bond/Letter of Undertaking is obtained from department.

Conclusion

In The end I would like to say that If you want to know all about GST and wants to Gain Full Knowledge of the subject matter related to GST , Then Stay Regular with pur Blog As We will Bring more articles on GST.