POS - Services in relation to immovable property (Where either the supplier or the recipient is located outside India) [Section 13(4) of the IGST Act] - GST Ready Reckoner - GST

Determination of place of supply of Services in relation to immovable property Services in relation to immovable property ( Section 13(4) of IGST Act 2017 Read with section 13(6) (7) of IGST Act) S.No. Nature of Supply of services Place of Supply 1. Supply of services supplied directly in relation to an immovable property, including- Services supplied in this regard by experts and estate agents, supply of accommodation by a 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, Architects or interior decorators. Place where the immovable property is located or intended to be located Note - As per section 13(6) of 13(7) of IGST Act 2017, where any services referred to in section 13(4) 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 8 of IGST Rules 2017 ]. Value of supply of service supplied in more than one State/Union territory The value of services supplied directly in relation to an immovable property in each State or Union territory where the service is supplied - (when such services are supplied in more than one State/union territory) is in proportion to the value for services determined in terms of the contract or agreement entered into in this regard. Manner of determining proportionate value of service in the absence of a contract or agreement In the absence of a contract or agreement between the supplier and recipient of services, the proportionate value of services supplied in different States/Union territories (where the service is supplied) is computed in accordance with rule 8 of IGST Rules . Rule 8 lays down that in the absence of any such contract or agreement, the value is determined by applying the provisions of rule 4 of the said rules, mutatis mutandis. As per Rule 4 of IGST Rule 2017 , in the absence of any contract or agreement between the supplier of services and recipient of services for separately collecting or determining the value of services in each such state or UT, as case may shall be determined in the prescribed manner. 1. Nature of services :- In case of services provided by way of lodging accommodation by a hotel, inn, guest house, club or campsite , by whatever name called (except cases where such property is a single property located in two or more contiguous States or Union territories or both) and services ancillary to such services. Manner of allocation- The supply of services shall be treated as made in each of the respective States or Union territories, in proportion to the number of nights stayed in such property. Example - A hotel chain X charges a consolidated sum of Rs. 30,000/- for stay in its two establishments in Delhi and Agra, where the stay in Delhi is for 2 nights and the stay in Agra is for 1 night. The place of supply in this case is both in the Union territory of Delhi and in the State of Uttar Pradesh and the service shall be deemed to have been provided in the Union territory of Delhi and in the State of Uttar Pradesh in the ratio 2:1 respectively. The value of services provided will thus be apportioned as Rs. 20,000/- in the Union territory of Delhi and Rs. 10,000/- in the State of Uttar Pradesh. 2. Nature of Services :- In case of all other services in relation to immovable property including services by way of accommodation in any immovable property for organising any marriage or reception etc., and in cases of supply of accommodation by a hotel, inn, guest house, club or campsite, by whatever name called where such property is a single property located in two or more contiguous States or Union territories or both, and services ancillary to such services. Manner of allocation :- The supply of services shall be treated as made in each of the respective States or Union territories, in proportion to the area of the immovable property lying in each State or Union territory. Example - There is a piece of land of area 20,000 square feet which is partly in State S1 say 12,000 square feet and partly in State S2, say 8000 square feet. Site preparation work has been entrusted to T. The ratio of land in the two states works out to 12:8 or 3:2 (simplified). The place of supply is in both S1 and S2. The service shall be deemed to have been provided in the ratio of 12:8 or 3:2 (simplified) in the States S1 and S2 respectively. The value of the service shall be accordingly apportioned between the States. 3. Nature of Services :- in case of services provided by way of lodging accommodation by a house boat or any other vessel and services ancillary to such services. Manner of allocations:- The supply of services shall be treated as made in each of the respective States or Union territories, in proportion to the time spent by the boat or vessel in each such State or Union territory, which shall be determined on the basis of a declaration made to the effect by the service provider. Example : - A company C provides the service of 24 hours accommodation in a houseboat, which is situated both in Kerala and Karnataka inasmuch as the guests board the house boat in Kerala and stay there for 22 hours but it also moves into Karnataka for 2 hours (as declared by the service provider). The place of supply of this service is in the States of Kerala and Karnataka. The service shall be deemed to have been provided in the ratio of 22:2 or 11:1 (simplified) in the states of Kerala and Karnataka, respectively. The value of the service shall be accordingly apportioned between the States. Important Notification Circular 1. 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:- 3.3 Whether the data hosting services are provided directly in relation to immovable property and whether the place of supply of the same is to be determined as per section 13(4) of the IGST Act . Clarification:- It is clarify in the para 3.3.4 Accordingly, it is clarified that in such a scenario, the data hosting services cannot be considered as the services provided directly in relation to immovable property or physical premises and hence, the place of supply of such services cannot be determined under section 13(4) of IGST Act . Examples Example 1:- Mr. Praveen an interior design consultant, having office at Lucknow (Uttar Pradesh) provided professional services to Mr. Nikhil who resides in Dubai, for his two Immovable property under contract , one property is outside India at Singapore (Outside India) and another at Surat(Gujarat). In the View of provision of section 13(4) and 13(6) of IGST Act 2017, the place of supply of Mr. Praveen (interior design consultant located in India) services provided Nikhil (recipient located outside India) in respect of immovable properties, located in Surat(Gujarat) and in Singapore (Outside India), is the location of immovable property, i.e. Surat (Gujarat). Example 2:- Mr. Ankit , provide construction services (registered in New Delhi), enters into a contract with Mr. Ashnir of New York provide professional services in respect of immovable properties of Mr. Ashnir Located in USA. In the View of provision of section 13(4) of IGST Act 2017, the place of supply of Mr. Ankit (provided construction services located in India) services provided Mr. Ashnir (recipient located outside India) in respect of immovable properties, located in USA( outside India) i.e. USA