Understanding the GST Place of Supply Rules for Transport Services
This article explores the Goods and Services Tax (GST) provisions for transportation services in India, detailing rules for different scenarios. It outlines how the place of supply is determined for both goods and passenger transport, as well as for services rendered onboard a conveyance. Recent updates from the 49th GST Council meeting and Budget 2023 impacting these rules are also discussed.
This article delves into the specific regulations governing the Goods and Services Tax (GST) place of supply for various transportation services, illustrated with practical examples. Transportation services are broadly categorized into three types: the movement of goods, the conveyance of passengers, and services delivered onboard a vehicle or craft. Recent updates to these provisions are also highlighted.
Update Details
The 49th GST Council meeting addressed the simplification of place of supply rules for goods transportation services. It was decided to remove Section 13(9) of the CGST Act, ensuring that when both the service provider and recipient are located outside India, the place of supply for such services will be the recipient's location. Official notification on this change is pending.
Budget 2023 introduced an amendment to Section 12(8) by removing its proviso. This aims to standardize the place of supply for goods transportation where both the service provider and recipient are within India, irrespective of the goods' final destination. This amendment is also awaiting notification from the CBIC.
Goods Transportation Services
The rules for determining the place of supply for goods transportation, including services via mail or courier, depend on the recipient's registration status.
| Service | Receiver | Place of Supply |
|---|---|---|
| Transportation of goods (including by mail or courier) | Registered Person | Location of such person (receiver) |
| Unregistered Person | Location at which such goods are handed over for their transportation |
Example 1: Intra-state Goods Movement XYZ, a goods transportation firm in Karnataka, is contracted by Akash Electronics, a Karnataka-registered entity, to transport 50 television sets. Supply of Service: Transporting goods Place of Supply: Karnataka (the location of the registered recipient) GST: CGST + SGST (intra-state transaction)
Example 2: Inter-state Goods Movement XYZ, a goods transportation firm in Karnataka, is engaged by Vinay Garments, registered in Maharashtra, to move 200 sarees from Bangalore to Mumbai. Supply of Service: Transporting goods Place of Supply: Maharashtra (the location of the registered recipient) GST: IGST (inter-state transaction)
Example 3: Goods Movement by Unregistered Person Mr. Sharma from Bangalore arranges for his car to be transported by rail freight to Mumbai, handing it over at the Bangalore station. Supply of Service: Transporting goods Place of Supply: Karnataka (location where the goods are handed over for transportation) GST: CGST + SGST (Indian Railways operates across India and is registered in all states).
Passenger Transportation Services
The place of supply for passenger transportation services also varies based on the recipient's registration status.
| Service | Receiver | Place of Supply |
|---|---|---|
| Transportation of passengers | Registered Person | Location of such person (receiver) |
| Unregistered Person | Location where the passenger embarks on the conveyance for a continuous journey |
If the right to passage is granted for future use and the initial embarkation point is unknown at the time of ticket issuance, the place of supply is determined by general provisions:
| Supply of Service | Place of Supply |
|---|---|
| To a registered person | Location of the registered recipient |
| To an unregistered person | Location of the recipient if the address is on record; otherwise, the supplier's location. |
Example 1: Registered Person Akash Electronics, registered in Bangalore, procures corporate flight tickets from Bangalore to Delhi through Happy Air Travels Ltd.’s Delhi branch. Supply of Service: Transporting passengers Place of Supply: Karnataka (location of the registered recipient) GST: IGST, as this branch of Happy Air Travels is registered in Delhi (most airlines hold registrations in all states).
Note: For passenger transport, a return journey is considered a separate journey, even if tickets for both onward and return travel are issued concurrently.
Example 2: Unregistered Person Ms. Anita books a round-trip air journey from Bangalore to Kolkata. She departs Bangalore on August 1st and arrives in Kolkata the same day. She returns from Kolkata to Bangalore on August 7th. She booked her return tickets in Bangalore simultaneously with the onward journey.
| Flight | Ticket Issued By | Place of Supply | GST |
|---|---|---|---|
| From Bangalore to Kolkata | Bangalore branch of airlines | Bangalore (since she is unregistered, the embarkation location is the place of supply) | CGST + SGST (Karnataka) |
| From Kolkata to Bangalore | Bangalore branch of airlines | Kolkata | IGST |
Services Provided Onboard a Conveyance
For services delivered aboard a conveyance, a specific rule applies for determining the place of supply.
| Service | Place of Supply |
|---|---|
| Supply of services on board a conveyance | Location of the first scheduled point of departure of that conveyance for the journey |
Example Vimana Air, registered in West Bengal, operates a flight from Guwahati (Assam) to Chennai, with stops in Kolkata and Bangalore. Ms. Anita boards the flight in Kolkata, destined for Bangalore. The air crew provides food and ensures passenger safety onboard. Supply of Service: Serving food to passengers and safety measures Place of Supply: Guwahati (Assam) (the first scheduled departure point of that aircraft) GST: IGST, as this branch of Vimana Air is registered in West Bengal (most airlines hold registrations in all states).
For instance, IndiGo maintains GST registrations in all states and union territories where it offers air travel services.