This circular provides clarification regarding the correct determination of place of supply for online services supplied to unregistered recipients, either directly or through electronic commerce operators. It addresses the issue of suppliers incorrectly recording the place of supply as their own location instead of the recipient’s State, which has been leading to wrong allocation of GST revenue between States.

It clarifies that under Section 12(2)(b)(i) of the IGST Act, read with Rule 46(f) of the CGST Rules, suppliers of online services — including OIDAR, online money gaming, and other digital services such as OTT subscriptions, e-magazines, and mobile app-based services — must mandatorily record the State name of the unregistered recipient on the tax invoice, irrespective of the transaction value. This recorded State name will be deemed as the address on record for determining the place of supply.

Suppliers are required to establish a mechanism to collect such State details before providing services, and failure to issue invoices with correct details may attract penal action under Section 122(3)(e) of the CGST Act.