The GST Circular addresses the issue of incorrect recording of the place of supply for online services provided to unregistered recipients. Suppliers are required to mention the recipient’s state on invoices for such services, regardless of the supply value, but many have been incorrectly using the supplier’s location instead. This leads to revenue being allocated to the wrong state.

The clarification emphasizes that, under Section 12(2)(b) of the IGST Act, the place of supply for services to unregistered recipients should be the recipient’s location, if their address is available on record. For online services, including OIDAR services and digital content, the tax invoice must include the recipient’s state, which will be treated as the recipient’s address for determining the place of supply.

Failure to comply with these requirements could result in penalties under Section 122(3)(e)