POS - Services is related Performance based services (Where either the supplier or the recipient is located outside India) [Section 13(3) of IGST Act] - GST Ready Reckoner - GST

Determination of place of supply of s ervices is related Performance based services Services is related Performance based services [ Section 13(3) of IGST Act 2017 read with section 13(6) (7) of IGST Act] S.No. Nature of Supply of services Place of Supply (POS) 1. (a) 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: POS shall be Location where the service is actually performed Services are provided from a remote location by way of electronic means POS shall be Location where goods are situated at the time of supply of services Exception :- This sec. 13(3)(a) of IGST Act 2017, shall not apply, if services supplied in respect of goods which are temporarily imported into India for repairs or for any other 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. 2. (b) 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. POS shall be Location where the services are actually performed Note - As per section 13(6) and 13(7) of IGST Act 2017, where any services referred to in section 13(3) is supplied services are supply at more than one location , including a location in the taxable territory, its place of supply shall be the location in the taxable territory. Services are supplied in more than one State or Union territory, the place of supply of such services shall be taken as being in each of the respective States or Union territories and the value of such supplies specific to each State or Union territory shall be in proportion to the value for services separately collected or determined in terms of the contract or agreement entered into in this regard or, in the absence of such contract or agreement on such other basis as may be prescribed [ under rule 7 of IGST Rules 2017 ]. Where the specified services mention u/s 13(3) of IGST , the Value of supply of service supplied in more than one State/Union territory [ under rule 7 of IGST Rules 2017 ]. where such services (specified u/s 13(3) of IGST Act) are supplied in more than one State or Union territory, and the proportion of value attributable to each such State and Union territory in the absence of any contract or agreement between the supplier of service and recipient of services for separately collecting or determining the value of the services in each such State or Union territory, as the case maybe, shall be determined in the following manner, namely: - In the case of services supplied on the same goods , Basis of apportionment:- by equally dividing the value of the service in each of the States and Union territories where the service is performed; Example - A company C which is located in Kolkata is providing the services of testing of a dredging machine and the testing service on the machine is carried out in Orissa and Andhra Pradesh. The place of supply is in Orissa and Andhra Pradesh and the value of the service in Orissa and Andhra Pradesh will be ascertained by dividing the value of the service equally between these two States. In the case of services supplied on different goods , Basis of apportionment:- by taking the ratio of the invoice value of goods in each of the States and Union territories, on which service is performed, as the ratio of the value of the service performed in each State or Union territory; Example - A company C which is located in Delhi is providing the service of servicing of two cars belonging to Mr. X. One car is of manufacturer J and is located in Delhi and is serviced by its Delhi workshop. The other car is of manufacturer A and is located in Gurugram and is serviced by its Gurugram workshop. The value of service attributable to the Union Territory of Delhi and the State of Haryana respectively shall be calculated by applying the ratio of the invoice value of car J and the invoice value of car A, to the total value of the service. In the case of services supplied to individuals , Basis of apportionment:- by applying the generally accepted accounting principles. Example - A makeup artist M has to provide make up services to an actor A. A is shooting some scenes in Mumbai and some scenes in Goa. M provides the makeup services in Mumbai and Goa. The services are provided in Maharashtra and Goa and the value of the service in Maharashtra and Goa will be ascertained by applying the generally accepted accounting principles. Important Notification Clarification 1. Place of supply in case of supply of various services on unpolished diamonds such as cutting and polishing activity which have been temporarily imported into India and are not put to any use in India. ( Circular No. 103/22/2019-GST dated 28.06.2019) In case of cutting and polishing activity on unpolished diamonds which are temporarily imported into India are not put to any use in India, the place of supply would be determined as per the provisions contained in section 13(2) of the IGST Act . 2. Place of supply in case of software/design services related to Electronics Semi-conductor and Design Manufacturing (ESDM) industry. ( Circular No. 118/37/2019-GST dated 11.10.2019). Issue :- whether provision of hardware prototypes and samples and testing thereon lends these services the character of performance-based services in respect of goods required to be made physically available by the recipient to the provider . Clarification Where service provider is involved in a composite supply of software development and design for integrated circuits electronically, testing of software on sample prototype hardware is often an ancillary supply, whereas, chip design/software development is the principal supply of the service provider. The service provider is not involved in software testing alone as a separate service. The testing of software/design is aimed at improving the quality of software/design and is an ancillary activity. the place of supply of software/design by supplier located in taxable territory to service recipient located in non-taxable territory by using sample prototype hardware / test kits in a composite supply, where such testing is an ancillary supply, is the location of the service recipient as per Section 13(2) of the IGST Act. Provisions of Section 13(3)(a) of IGST Act do not apply separately for determining the place of supply for ancillary supply in such cases. 3. Clarification on place of supply of data hosting services provided by service providers located in India to cloud computing service providers located outside India. [ Circular No. 232/26/2024-GST dated 10.09.2024 ] Issue - Whether the data hosting services are provided in relation to goods made available by recipient of services to service provider for supply of such services and whether the place of supply of the same is to be determined as per section 13(3)(a) of the IGST Act, 2017 . Clarification It is clarify in the para 3.2.3 of the circular 3.2.3 it is clarified that data hosting services provided by data hosting service provider to the said cloud computing service providers cannot be considered in relation to the goods made available by the said cloud computing service providers to the data hosting service provider in India and hence, the place of supply of the same cannot be determined under section 13(3)(a) of the IGST Act . 4 . Clarification regarding advertising agency raises invoice to the foreign client for the rendered advertising services and receives the payments in foreign exchange from the foreign client. Whether the advertising services provided by the advertising companies to foreign clients can be considered as performance-based services as per section 13(3) of the IGST Act ? [ See para 3.3 of Circular No. 230/24/2024-GST dated 10.09.2024 ] 5. Clarification regarding whether the place of supply in case of service of transportation of goods, including through mail and courier, in cases where location of supplier of services or location of recipient of services is outside India, will be determined as per section 13(2) of IGST Act or will be determined as per section 13(3) of IGST Act. [ See S.No. 1 of Circular No. 203/15/2023-GST dated 27.10.2023 ] Examples Example 1:- XYZ Ltd (registered) of New Delhi imports machinery from Germany to be installed in New Delhi. The service engineer also arrives for installation of machinery as per the contract. Since, the machinery is getting installed at New Delhi, In this case, POS shall be , the service supplied by the engineer for installation, the place of supply will be New Delhi. Example 2:- ABC Ltd exported goods to GMBH Inc of Germany. The goods were imported into India for free repairs for one year as per the contract. The goods were exported after the repairs. In this case place of supply is the location of recipient, Germany. Example 3:- M/s Joinder Drills of Australia exports rough rock cutting diamonds to M/s Ankit Enterprises of India, registered supplier in the state of Haryana. M/s Ankit Enterprises is expected them into tools and export the same to the supplier in Autralia. the process does not involve any sophisticated process other than cutting, polishing and finishing. M/s Ankit Enterprises requests M/s Joinder Drills for use of such tools for his business in India for 3 months, which is agreed to by the supplier. it then exports it to the Australian supplier, invoicing it for Rs.12,00,000/- for processing it into the required tool. In this case, the place of supply of the services provided by M/s Ankit Enterprises is the place where the services are actually performed i.e. India as the tools to be exported have been used for 3 months before their export.