Clarification on Place of Supply for Online Service
GST Circular No 242/36/2024 has been issued for Clarification on Place of Supply for Online Service.This point was proposed in 55th GST Council Meeting. The proposal states when online service supplying to unregistered person the supplier must mention the customer’s state on the invoice to resolve confusion about taking supplier’s loaction as place of supply.
Clarification :
1. When service supplied to unregistered person, the place of supply is : If recipient’s address is on record , the recipient’s location is the place of supply. If the address is not on record, the supplier’s location becomes Place of supply.
2. Rule 46(f) requires supplier of OIDAR service or online Money Gaming or service provided through e-commerce Platforms to mention the recipient’s state on the tax invoice.
3. As per this clarification it is mandatory for supplier who provides online service to unregistered person , must record state of recipient on the invoice. This applies to Online Money Gaming , OIDAR Services , and any other digital services like OTT subscriptions (Netflix, Amazon Prime etc) , E-newspapper/ magazine subscriptios.
4. The state recorded on the invoice will deemed as address on the record for detemining the place of supply.If the state is not recorded , the supplier’s location will be place of supply.
5. Suppliers who fails to follow this , they may face the penalties under section 122(3)(e) of CGST Act for issuing incomplete invoice.
