Clarification on Place of Supply of Online Services
<p><span>The Ministry of Finance, Government of India, issued Circular No. 242/36/2024-GST on December 31, 2024, providing crucial clarifications regarding the place of supply for online services supplied by service providers to unregistered recipients. This circular addresses non-compliance issues related to recording the correct place of supply on invoices.</span></p><h4>Key Highlights:</h4><ol start="1"><li><span><strong>Definition of Online Services</strong>: Online information and database access or retrieval services (OIDAR) are defined under the IGST Act, including services like online advertising, cloud services, e-books, and digital content.</span></li><li><span><strong>Recording Place of Supply</strong>: Suppliers of online services to unregistered recipients must mandatorily record the recipient's State name on the invoice and declare the place of supply as the recipient's location, irrespective of the supply value.</span></li><li><span><strong>Electronic Commerce Operators</strong>: The circular applies to services supplied through e-commerce operators and other digital platforms, ensuring the correct declaration of the place of supply.</span></li><li><span><strong>Compliance Requirements</strong>: Suppliers must devise mechanisms to collect recipient's State details before making online supplies and ensure these details are recorded on the tax invoice.</span></li><li><span><strong>Penal Action</strong>: Failure to comply with the mandatory recording of recipient's State on invoices may result in penal action under the CGST Act.</span></li></ol><p><span>This circular aims to ensure uniform implementation of place of supply provisions and correct allocation of revenue to the appropriate State.</span> <a href="https://cms.plasament.com/storage/circular-no-242-2024.pdf">circular-no-242-2024</a><br> </p>