Place & Time of Supply under GST for Subscription Services through Vendor’s Website

POS (Place of Supply) and TOS (Time of Supply) under GST for Subscription Services through Vendor’s Website

Summary: The concepts of Time of Supply (ToS) and Place of Supply (PoS) under GST are crucial for determining tax liability on subscription-based services offered through a vendor’s website. ToS for services is generally the earlier of the invoice date or the payment receipt date. For continuous or recurring services, ToS may align with the billing cycle or the date of service provision. In cases involving vouchers, ToS depends on whether the supply is identifiable at issuance or at redemption. PoS, governed by Section 12(1) of the IGST Act, is usually the location of the service recipient. For registered recipients (B2B), the PoS is their registered location. For unregistered recipients (B2C), it depends on whether their address is available in the supplier’s records. If the address is unavailable, the supplier’s location determines the PoS. For instance, a service provided to a customer in another state is treated as inter-state (IGST applicable), while services within the same state are intra-state (SGST + CGST). These principles ensure accurate GST application across various scenarios.

In the context of the Goods and Services Tax (GST) in India, the Tme of supply and Place of Supply (PoS) are important to ensure that GST is correctly applied to the orders placed by customers through a vendor’s website. Here’s an overview of how ToS and PoS work in relation to online orders under the GST framework.

1. Time of Supply (TOS) in normal subscription of services through website

As per Section 13 – Time of supply of services the TOS of service is determined by the earlier of the following two events:

• Date of issue of invoice: If the service provider issues an invoice.
• Date of payment receipt: When the payment for the service is received.

Provided that where the supplier of taxable service receives an amount up to one thousand rupees in excess of the amount indicated in the tax invoice, the time of supply to the extent of such excess amount shall, at the option of the said supplier, be the date of issue of invoice relating to such excess amount.

Example:

• If you’re providing a subscription-based service through your website and a customer pays for a subscription on January 1st, but you issue the invoice only on January 5th, the time of supply would generally be January 1st (the date the payment was received).

2. Continuous or Recurring Services

If your website offers continuous or recurring services (like a monthly subscription), the time of supply may be based on the time when the service is provided rather than the payment or invoice date.

Example:

A customer subscribes to a washing service on your website on January 1st, and you charge them monthly. The time of supply for the service would likely be January 1st (the date of the transaction) or on a regular basis each month, depending on the specific billing cycle and tax laws.

3. Supply of Vouchers

In case of supply of vouchers by a supplier, the time of supply shall be –

• the date of issue of voucher, if the supply is identifiable at that point; or
• the date of redemption of voucher, in all other cases.

Example:

• If you have provided vouchers on your website which can be redeemed by customer as discount for availing washing services (the only service provided by you) then TOS shall be the date of issue of such voucher

4. Place of Supply (PoS) for GST

Section 12(1) of the IGST Act provides for determination of the Domestic POSoS i.e. where the Location do Supplier (LS) and Location of Recipient (LR) both are in India. The provisions dealing with Domestic POS for different situations are explained below.

General principle – POSoS is Location of service recipient [Section 12(2)]

The general or default principle is that the POSoS is the –

i. ‘LR’ if the supply is made to a recipient registered for GST (i.e. B2B transactions);
However in case of supply to an unregistered person (i.e. B2C transactions), the POSoS will be –

ii. ‘LR’ where the recipient’s address is available in the records of the supplier; and

iii. ‘LS’ in other cases.

For orders placed by customers on a website, the following PoS rules under GST apply:

The Place of Supply for services is typically the location of the recipient (customer). If the service is consumed at the location of the customer (e.g., an online service), the PoS is the place where the customer is located. This can have significant implications if the vendor and customer are located in different states.

Example:

• A customer provides its address then POS shall be the Location os such reciepient.
• A customer does not provide its Address then POS Shall be Location of Supplier
• A customer in Delhi avails a service from a vendor in Delhi: PoS = Delhi (intra-state supply, SGST + CGST)
• A customer in Bangalore subscribes to an online service from a vendor in Kolkata: PoS = Bangalore (inter-state supply, IGST)