Place of Supply Rules

Place of Supply Rules

Place of Supply Rules in EquiBillBook determine whether a transaction is intra-state or inter-state, which directly affects which tax types (CGST+SGST or IGST) are applied. This guide will help you configure place of supply rules correctly.

Understanding Place of Supply

Place of Supply is a critical concept in GST that determines:

• Whether the transaction is intra-state or inter-state
• Which tax types apply (CGST+SGST or IGST)
• Tax compliance and reporting requirements

Place of Supply Rules

GST law defines place of supply based on the type of transaction:

For Goods

• Place of Supply: Location where goods are delivered
• If goods are delivered to customer's location, that is the place of supply
• If goods are delivered to a third party, third party's location is the place of supply

For Services

• Place of Supply: Generally the location of the service recipient
• For B2B services: Location of service recipient
• For B2C services: Location of service provider (if recipient is unregistered)

Accessing Place of Supply Rules

To configure place of supply rules:

1. Navigate to Settings → Tax Settings → Place of Supply Rules
2. You'll see options to configure place of supply determination
3. Set up rules based on your business type
4. Click "Save" to apply changes

Configuring Place of Supply

Business Location Setup

First, ensure your business location is correctly configured:

1. Go to Settings → Organization Settings
2. Verify your business state/UT is correct
3. Ensure address details are accurate
4. This is your "Location of Supplier"

Customer Location Setup

Ensure customer locations are correctly configured:

1. Go to Customers → Select a customer
2. Verify customer's billing address state
3. Verify customer's shipping address state (if different)
4. Ensure GST registration state is correct

Automatic Place of Supply Determination

EquiBillBook automatically determines place of supply based on:

For Goods

• Shipping Address: If shipping address is provided, that state is the place of supply
• Billing Address: If no shipping address, billing address state is used
• Customer State: Customer's registered state is used as fallback

For Services

• B2B Services: Customer's registered state (GST registration state)
• B2C Services: Your business state (if customer is unregistered)
• Service Location: If service is performed at a specific location, that location

Intra-State vs Inter-State Determination

Intra-State Transaction

Transaction is intra-state when:

• Your business state = Customer's place of supply state
• Tax applied: CGST + SGST (or CGST + UTGST for Union Territories)
• Example: Business in Maharashtra selling to customer in Maharashtra

Inter-State Transaction

Transaction is inter-state when:

• Your business state ≠ Customer's place of supply state
• Tax applied: IGST
• Example: Business in Maharashtra selling to customer in Karnataka

Special Cases

Union Territories

• For intra-UT transactions: CGST + UTGST
• For inter-state with UT: IGST
• UTGST applies only to Union Territories

Export Transactions

• Place of supply is outside India
• Zero-rated (0% GST)
• IGST is applied but at 0% rate
• Eligible for input tax credit refund

Import Transactions

• Place of supply is the location of importer
• IGST is applicable on imports
• Customs duty is separate from GST

Configuring Default Rules

You can configure default place of supply rules:

Default Shipping Address

• Set default to use shipping address for goods
• Set default to use billing address if shipping not provided
• Configure fallback rules

Service-Specific Rules

• Configure rules for different service types
• Set default for B2B vs B2C services
• Configure location-based service rules

Manual Override

In some cases, you may need to manually override place of supply:

When to Override

• Special circumstances not covered by automatic rules
• Complex service delivery scenarios
• Third-party delivery locations
• Multiple location services

How to Override

1. While creating invoice/transaction
2. Navigate to tax section
3. Manually select place of supply
4. System will apply appropriate taxes

Best Practices

• Accurate Addresses: Ensure all customer addresses include correct state information
• Verify GST Registration: Confirm customer's GST registration state
• Shipping Address: Always capture shipping address for goods transactions
• Regular Review: Periodically review place of supply determinations
• Documentation: Maintain proper documentation for place of supply
• Compliance: Ensure place of supply rules comply with GST law

Common Scenarios

Scenario 1: Intra-State Sale of Goods

Business in Maharashtra, Customer in Maharashtra, Goods delivered to Maharashtra:

• Place of Supply: Maharashtra
• Transaction Type: Intra-State
• Tax Applied: CGST 9% + SGST 9% = 18%

Scenario 2: Inter-State Sale of Goods

Business in Maharashtra, Customer in Karnataka, Goods delivered to Karnataka:

• Place of Supply: Karnataka
• Transaction Type: Inter-State
• Tax Applied: IGST 18%

Scenario 3: B2B Service

Business in Maharashtra, Customer (registered) in Karnataka, Service provided:

• Place of Supply: Karnataka (customer's location)
• Transaction Type: Inter-State
• Tax Applied: IGST 18%

Scenario 4: B2C Service

Business in Maharashtra, Customer (unregistered) in Karnataka, Service provided:

• Place of Supply: Maharashtra (service provider's location)
• Transaction Type: Intra-State
• Tax Applied: CGST 9% + SGST 9% = 18%

Verification and Testing

After configuring place of supply rules:

Test Scenarios

• Create test invoices for intra-state transactions
• Create test invoices for inter-state transactions
• Verify correct tax types are applied
• Check tax calculations are accurate

Review Transactions

• Periodically review actual transactions
• Verify place of supply is determined correctly
• Check tax compliance
• Address any discrepancies

What's Next?

After configuring place of supply rules, you should:

1. Test place of supply determination on sample transactions
2. Verify tax calculations are correct
3. Set up Tax Groups
4. Configure Tax Exemptions (if applicable)
5. Set up Reverse Charge (if applicable)

Proper place of supply configuration ensures accurate tax type selection and GST compliance in EquiBillBook.