18 April 2018
I provide service to a party in Delhi. 6 years ago. But they paid this month. And the party is unregistered. Now on Bill whether I shall charge IGST or CGSt/SGST??
26 July 2024
When dealing with GST on services provided to an unregistered party in another state, such as the scenario you described, the key factor to determine the correct tax rate is the **place of supply**. Here’s how to handle it:
### **1. **Understanding Place of Supply for Services**
#### **A. **General Rule for Services** - **Place of Supply**: The place of supply for services is usually the location where the recipient (customer) is located, as per the GST laws. - **Registered Recipient**: If the recipient is registered under GST, the place of supply is the location of the recipient. - **Unregistered Recipient**: If the recipient is unregistered, the place of supply is still the location of the recipient.
### **2. **Scenario Analysis**
**You provided services to a party in Delhi, but they are unregistered, and payment is made now.**
#### **A. **Determine the Place of Supply** - **Recipient Location**: Since the party receiving the service is located in Delhi, the place of supply is Delhi.
#### **B. **Applicable GST Rate** - **Intra-State Supply**: For intra-state supplies, CGST and SGST apply. - **Inter-State Supply**: For inter-state supplies, IGST applies.
**Since you are providing services to a party in Delhi but are located outside Delhi, this constitutes an inter-state supply.**
### **3. **GST Application**
**As it is an inter-state supply (service provided to Delhi from a location outside Delhi), IGST should be charged.**
#### **A. **Invoice Details** - **Tax Type**: IGST - **HSN/SAC Code**: Use the relevant SAC code for the type of service provided. - **Rate**: The rate of IGST applicable to the service.
### **4. **Steps to Take**
1. **Issue Invoice**: Raise the invoice mentioning IGST as the applicable tax. 2. **Record the Payment**: Ensure that the payment is properly recorded in your accounts. 3. **File Returns**: Report the invoice details in your GST returns (GSTR-1) and pay the applicable IGST in your GSTR-3B.
- **For Services Provided Across State Lines (Inter-State)**: Charge IGST. - **Invoice**: Ensure it reflects IGST with the appropriate SAC code and GST rate. - **Compliance**: Report the details in your GST returns and make the IGST payment accordingly.
By following these guidelines, you ensure compliance with GST regulations and correct application of taxes on services provided to unregistered parties in other states.
CAclubindia
