Clarification on the entitlement of input tax credit where the place of supply is determined in terms of the proviso to sub-section (8) of section 12 of the Integrated Goods and Services Tax Act, 2017

Place of supply rules: transportation to foreign destination treated as foreign place of supply; IGST payable and ITC claimable.

Where transportation of goods by way of service is to a destination outside India and both supplier and recipient are located in India, the place of supply is the foreign destination. Such supply is an inter State supply and IGST is chargeable. The recipient located in India is eligible to claim input tax credit of the IGST charged subject to the conditions of sections 16 and 17 of the TNGST Act. Suppliers must report the place of supply in GSTR 1 using State code '96 Foreign Country'.