Important Keywords: IGST Rules, Section 13.
Words: 1,083; Read time: 6 minutes.
Table of Contents
Rule 7 of IGST Rules, 2017.
The supply of services attributable to different States or Union territories, under sub section (7) of section 13 of the said Act, in the case of 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, or in the case of 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, where the location of the supplier of services or the location of the recipient of services is outside India, and where such services are supplied in more than one State or Union territory,
shall be taken as being in each of the respective States or Union territories, 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:-
(i) in the case of services supplied on the same goods, by equally dividing the value of the service in each of the States and Union territories where the service is performed;
(ii) in the case of services supplied on different goods, 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;
(iii) in the case of services supplied to individuals, by applying the generally accepted accounting principles.
Illustration-1 : 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.
Illustration-2 : 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.
Illustration-3 : 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.]
1. Inserted (w.e.f. 01.01.2019) by Notification No. 04/2018 Integrated Tax dated 31.12.2018.
Frequently Asked Questions
-
What is Rule 7 of the Integrated Goods and Services Tax Rules 2017?
Rule 7 pertains to the determination of the place of supply of goods and services, ensuring clarity on where the tax is applicable.
-
How does Rule 7 define the place of supply for goods?
Rule 7 specifies that the place of supply for goods is the location where the goods are delivered to the recipient.
-
What is the significance of Rule 7 in cross-border transactions?
Rule 7 helps identify the place of supply in cross-border transactions, which is crucial for determining the applicable IGST and ensuring compliance.
-
Are there any exceptions to Rule 7 in determining the place of supply?
Yes, Rule 7 includes specific provisions for exceptions, such as goods supplied on board a conveyance, which may have different place of supply rules.
-
How does Rule 7 affect e-commerce businesses?
E-commerce businesses must adhere to Rule 7 to accurately determine the place of supply for their transactions, ensuring proper tax collection and compliance.
-
Can Rule 7 be applied to services as well?
Yes, while Rule 7 primarily addresses goods, it also outlines the principles for determining the place of supply for certain services.
-
What are the implications of non-compliance with Rule 7?
Non-compliance with Rule 7 can lead to incorrect tax reporting, potential penalties, and issues with downstream tax credits for businesses.
-
How often is Rule 7 reviewed or amended?
Rule 7 may be reviewed by tax authorities periodically to align with changing business practices and legal frameworks, though no fixed schedule is established.
-
What resources are available to understand Rule 7 better?
Tax professionals, government publications, and official GST portals provide comprehensive resources to better understand Rule 7 and its implications.
-
How can businesses ensure compliance with Rule 7?
Businesses can ensure compliance with Rule 7 by maintaining accurate records of transactions, understanding their supply chain, and consulting with tax experts when necessary.
Download Pdf: https://taxinformation.cbic.gov.in/
