Nature of Supply under GST: Inter State, Intra State Supply

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Nature of Supply under GST: GST is a destination based tax i.e consumption tax, which means tax will be levied where goods and services are consumed and will accrue to that state thus, it is of immense importance that the place of supply of any transaction is determined correctly. To determine the correct place of supply, it is important that the nature of supply be understood first. Following table list provisions as contained in IGST Act, 2017, to know whether a supply will be treated as Inter State or Intra State supply.

Nature of Supply under GST

The following services shall be treated as inter state supply:

in the taxable territory, not being an intra-State supply and not covered elsewhere in this section​

Inter State Supply (Sec 7)
Supply ofGoodsServices
Location of the supplier and the place of supply are intwo different States; –

 

two different Union territories; or a State and a Union territory

two different States;

 

two different Union territories; or a State and a Union territory

Importtill they cross the customs frontiers of IndiaNo specific requirement (all services imported will be treated as inter state supply)
supplier located in India and the place of supply is outside India
to or by a Special Economic Zone developer or a Special Economic Zone unit
in the taxable territory, not being an intra-State supply and not covered elsewhere in this section

The following supplies shall be treated as intra state supply:

Intra State Supply (Sec 7)
Supply ofGoodsServices
Location of the supplier and the place of supply are inSame State or Same Union territorysame State or same Union territory
Following will not be considered as Intra State Supply
 
  •  supply of goods to or by a Special Economic Zone developer or a Special Economic Zone unit
  • goods imported into the territory of India till they cross the customs frontiers of India
  • supplies of goods made to a tourist as referred to in Section 15
 

Following will be treated as establishments of distinct persons:

  • an establishment in India and any other establishment outside India;
  • an establishment in a State or Union territory and any other establishment outside that State or Union territory; or
  • an establishment in a State or Union territory and any other establishment being a business vertical registered within that State or Union territory

A person carrying on a business through a branch or an agency or a representational office in any territory shall be treated as having an establishment in that territory

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