This circular provides clarification on the entitlement of input tax credit (ITC) in cases where services of transportation of goods, including by mail or courier, are supplied by a service provider in India to a recipient located in India, but the place of supply is determined as a location outside India under the proviso to section 12(8) of the IGST Act.

It clarifies that where both the supplier and the recipient of transportation services are located in India and the goods are transported to a destination outside India, the place of supply shall be the foreign destination of the goods, as specified in the proviso to section 12(8) of the IGST Act. In such cases, the supply qualifies as an inter-State supply in terms of section 7(5) of the IGST Act, and IGST is chargeable by the supplier.

The circular further clarifies that the recipient of such transportation services is eligible to avail input tax credit of the IGST charged, subject to fulfillment of the conditions prescribed under sections 16 and 17 of the CGST Act. The fact that the place of supply is outside India does not restrict the availment of ITC when both supplier and recipient are located in India.

It is also clarified that, for reporting such supplies in FORM GSTR-1, the supplier is required to mention the place of supply by selecting State code “96 – Foreign Country.” These clarifications aim to remove ambiguity and ensure uniform GST compliance in cases involving export-related transportation services.