Delhi Government Clarifies Place of Supply for Online Services to Unregistered Persons:

Delhi Government Clarifies Place of Supply for Online Services to Unregistered Persons The Delhi Government's Department of Trade and Taxes has issued a circular dated June 13, 2025 [Circular No. 36/2024-GST of State Tax], to clarify how GST should be applied on online services offered to individuals who are not registered under GST (normal consumers). This circular is being issued after a similar one issued earlier by the Central Board of Indirect Taxes and Customs (CBIC) dated December 31, 2024 [Circular No. 242/36/2024-GST], which provided detailed guidance on how to determine the "place of supply" for these types of online services. The “place of supply” is essential because it helps decide which state will receive the tax and whether the service provider should charge CGST+SGST (within the same state) or IGST (between different states). By following the circular of CBIC, the Delhi Government ensures that the same rules apply across the country (India), so there is no confusion or difference from one state to another. This circular does not implement any new rule but only gives clarification to make things easier in comparison to earlier for taxpayers to understand and follow them. It applies under the Delhi GST Act, 2017. If anyone faces difficulty in following this circular, they are recommended to contact the office of the Commissioner of State Tax in Delhi for assistance. In accordance with the order, it is being noticed by the higher authorities that numerous suppliers providing online services, no matter via direct mode or e-commerce platforms, are not accurately mentioning the state of the recipient on the invoices when supplying to unregistered recipients. Instead of indicating the recipient's state as the place of supply, they are incorrectly mentioning their own (supplier’s) state. These mistakes in reporting are leading to taxes reaching another state. Hence, to solve this issue and ensure all departments are obeying the same rules, the Central Board of Indirect Taxes and Customs (CBIC) has clarified that the supplier must record the state of the recipient on the invoice in related cases. This process is the same even for the recipient who is not registered under GST, irrespective of the value of the supply.

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Legal rules: As per Section 12(2) of the IGST Act:

• If the recipient is registered, the place of supply will be the recipient's location.
• If the recipient is unregistered and an address is available, the place of supply will be the recipient's location.
• If no address is available, use the supplier’s location.

As per Rule 46 of the CGST Rules, the invoice must include:

• Recipient’s name, address, and state name (especially in cases of online services or when supplied via e-commerce), even for supplies under Rs. 50,000.

Final Clarification: Authorities have clarified that for all online services supplied to unregistered persons, the recipient’s state must be recorded and displayed as the place of supply in the invoice. This is compulsory and helps ensure GST is reaching the correct state.