CBIC clarifies on determination of place of supply in case of software or design services related to Electronics Semi-conductor and Design Manufacturing industry

Oct 15, 2019 | by Avantis RegTech Legal Research Team


The Central Board of Indirect Taxes and Customs (CBIC) on October 11, 2019, has given clarification regarding determination of place of supply in case of software/design services related to Electronics Semi-conductor and Design Manufacturing (ESDM) industry.

Whereas, trade has requested clarification on whether provision of hardware prototypes and samples and testing thereon lends these services the character of performance-based services in respect of “goods required to be made physically available by the recipient to the provider”.

CBIC examine the provisions relating to determination of place of supply as contained in the Integrated Goods & Services Tax Act, 2017 and clarified that the place of supply of software/design by supplier located in taxable territory to service recipient located in non-taxable territory by using sample prototype hardware / test kits in a composite supply, where such testing is an ancillary supply, is the location of the service recipient as per Section 13(2) which specifies that this section will apply to determine the place of supply of services where location of supplier or location of recipient is outside India. Provisions of Section 13(3)(a) do not apply separately for determining the place of supply for ancillary supply in such cases.

[Circular No. 118/37/2019-GST]


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