CBIC issued clarification on place of supply of Online Services supplied to unregistered recipient

Clarification on Place of Supply: The circular clarifies that for online services supplied to unregistered recipients, suppliers must record the name of the recipient’s State on invoices, regardless of the service’s value. This is to ensure that the place of supply is accurately declared as the recipient’s location, thereby preventing revenue misallocation to the supplier’s location.
Legal Provisions and Requirements: The circular references the Integrated Goods and Services Tax Act (IGST Act) and Central Goods and Services Tax Rules (CGST Rules), emphasizing the obligation of suppliers to comply with recording the recipient’s State name in cases involving online services, including OIDAR and online money gaming, to maintain proper invoicing and tax compliance.
Consequences of Non-Compliance: Suppliers who fail to adhere to these invoicing requirements may face penalties under the CGST Act. The circular encourages the issuance of trade notices to inform stakeholders about these clarifications and the importance of accurate invoicing for online services to unregistered recipients.