GST Rates on Common Services
| Service | Rate |
|---|---|
| Most professional services (legal, IT, consulting) | 18% |
| Telecom and internet services | 18% |
| Banking and financial services | 18% |
| Insurance | 18% |
| Restaurant (non-AC, no liquor) | 5% (no ITC) |
| Restaurant (AC or licensed for liquor) | 5% (no ITC) |
| Hotel accommodation (tariff ₹7,500+) | 18% |
| Hotel accommodation (tariff under ₹7,500) | 12% |
| Hotel accommodation (under ₹1,000) | Exempt |
| Transportation of passengers (AC bus, train, flight economy) | 5% (no ITC) |
| Outdoor catering | 5% |
| Real estate (under-construction, affordable housing) | 1% (no ITC) |
| Real estate (under-construction, other) | 5% (no ITC) |
| Healthcare (clinical establishments) | Exempt |
| Education (recognised schools) | Exempt |
Exempt Services
- Healthcare by clinical establishments
- Education up to higher secondary
- Public transport by metro, monorail, non-AC stage carriage
- Services by RBI to banks (most)
- Charitable activities by registered NGOs
- Religious activities at registered places of worship
- Services by way of slaughtering of animals
- Funeral, burial, crematorium services
Place of Supply Rules
Place of supply determines whether IGST or CGST+SGST applies.
B2B Services (Section 12 of IGST Act)
Default rule: Place of supply = location of the registered recipient. So if a Mumbai consultant bills a Bangalore company, place of supply is Bangalore → IGST applies.
B2C Services
Default rule: Place of supply = location of recipient if known; otherwise location of supplier. For services worth over ₹50,000 to unregistered persons, recipient address must be recorded.
Special Rules — Some Service Types
| Service | Place of supply |
|---|---|
| Immovable property services | Location of the property |
| Restaurant, beauty parlour, fitness | Where the service is performed |
| Training, performance, admission to event | Where event is held |
| Transportation of goods | Location where goods are handed over |
| Passenger transport | Where the journey starts |
| Telecom services (postpaid) | Billing address of subscriber |
| Banking services (account holders) | Location of account holder |
Services Under Reverse Charge
Some services attract RCM — recipient pays GST. See our RCM tutorial for the full list. Common ones:
- Legal services (recipient is any business entity)
- Goods Transport Agency (GTA) services
- Director's services (recipient is the company)
- Sponsorship (recipient is body corporate / partnership)
- Import of services
Export of Services
Service export is treated as zero-rated supply. Five conditions must all be met:
- Supplier of service is located in India
- Recipient is located outside India
- Place of supply is outside India
- Payment received in convertible foreign exchange (or INR where permitted by RBI)
- Supplier and recipient are not merely establishments of the same person
Exporters can either pay IGST and claim refund, or supply under LUT (Letter of Undertaking) without payment of tax and claim refund of unutilised ITC.
iAccounting handles place-of-supply rules automatically based on customer location and service type. Export invoices are flagged for LUT/refund tracking. Reverse charge is auto-applied on service ledgers tagged as RCM.
See service invoicing →Continue Learning
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