How to Determine the Place of Supply of Telecommunication and Financial Services

Under GST, specific rules have been laid down for determining the place of supply of telecommunication services and financial services. Knowing how to determine the place of supply is very important to ensure that the correct tax is charged on a supply.  Let us understand how to determine the place of supply of telecommunication services and financial services.

Place of supply of telecommunication services
Telecommunication services include the services of telephone, internet, data transfer, broadcasting, cable, DTH (Direct to home) services, etc. For determining place of supply, telecommunication services are divided into 3 categories:

1. Services provided using a fixed telecommunication line, leased circuit, internet leased circuit, cable or dish antenna
2. Postpaid mobile connection
3. Prepaid mobile connection

Type of service

Place of supply

Example

Services provided using fixed telecommunication line, leased circuits, internet leased circuits, cable or dish antenna

Location where the telecommunication line, leased circuit, cable connection or dish antenna is installed

Mr. Rajesh, a resident of Madhya Pradesh, purchases a dish antenna from Leo DTH, a company providing DTH services, registered in Madhya Pradesh. The DTH is installed in Mr. Rajesh’s home.
Location of supplier: Madhya Pradesh
Place of supply: Madhya Pradesh
This is an intrastate supply and the taxes applicable are CGST + SGST

Postpaid mobile connection

Billing address of the recipient on the records of the supplier

Mr. Sarathi in Andhra Pradesh is using a postpaid mobile connection, for which the billing address is of his parents in Karnataka. The mobile connection is of RT Telecom, registered in Karnataka.
Location of supplier: Karnataka
Place of supply: The billing address of the postpaid mobile connection is Karnataka. Hence, the place of supply is Karnataka.
This is an intrastate supply and the taxes applicable are CGST + SGST.

Prepaid mobile connection

When supplied by a selling agent/re-seller/distributor of the supplier
Address of the selling agent /re-seller/distributor as per the records of the supplier at the time of supply

Radha Recharges, a registered retailer in Tamil Nadu, supplies a prepaid recharge voucher of RT Telecom to a customer.
Location of supplier: Tamil Nadu
Place of supply: The place of supply is the address of Radha Recharges, i.e. Tamil Nadu.
Hence, this is an intrastate supply and the taxes applicable are CGST+ SGST.

When recharge is done through internet banking or other electronic modes of payment 
Location of the recipient in the records of the supplier

Ms. Lakshmi in Puducherry does a prepaid recharge of her RT Telecom mobile connection. The recharge is done from RT Telecom’s website and payment is done using credit card. RT Telecom is registered in Puducherry and Ms. Lakshmi’s location in the records of RT Telecom is Puducherry.
Location of supplier: Puducherry
Place of supply: Puducherry
This is an intrastate supply and the taxes applicable are CGST + SGST.

Place of supply of financial services
Financial services are divided into 2 categories:

1. Insurance services
2. Banking and other financial services

Type of service

Type of recipient

Place of supply

Example

Insurance services

Registered person

Location of the recipient

Allen Fire Insurance Corporation, registered in Uttar Pradesh, provides fire insurances services to Ganesh Hardware, registered in Uttar Pradesh
Location of supplier: Uttar Pradesh
Place of supply: Uttar Pradesh
This is an intrastate supply and the taxes applicable are CGST + SGST

Unregistered person

Location of the recipient in the records of the supplier

Allen Fire Insurance Corporation, registered in Uttar Pradesh, provides fire insurances services to an unregistered person, Mr. Rahul, whose address in the records of Allen Fire Insurance Corporation is in Uttar Pradesh.
Location of supplier: Uttar Pradesh
Place of supply: Uttar Pradesh
This is an intrastate supply and the taxes applicable are CGST + SGST

Banking and other financial services

Not applicable

Location of the recipient in the records of the supplier
If the location of the recipient is not in the records of the supplier, place of supply will be the location of the supplier

Ms. Mona, residing in Maharashtra, has an account in Shri Surya Co-operative bank, registered in Gujarat. In the records of the bank, the address of Ms. Mona is of her parents’ home in Gujarat.
For the banking service provided by Shri Surya Co-operative bank,
Location of supplier: Gujarat
Place of supply: Gujarat
This is an intrastate supply and the taxes applicable are CGST + SGST

As you can observe, in all the cases of telecommunication and financial services, the supply is intrastate. This is because service providers will now need to register in every state where they supply taxable services.