As an entrepreneur navigating India’s GST regime, one of the most critical concepts to understand is ‘place of business’. The place of business you register under GST has key compliance and tax implications.
In this article, I’ll explain in simple terms exactly what place of business in GST means, the types of places of business, and why it matters. Having clarity on place of business will ensure you get your GST registrations right the first time.
What Does Place of Business Mean Under GST?
The place of business refers to the physical location or premises where a business carries out its core operations and activities. Some key elements that constitute place of business under GST laws are:
- It is a tangible space like a building, industrial unit, office, store etc. where business is conducted. A virtual address does not qualify.
- Some business activity directly connected to the supply of goods or services happens at this place. It is not just a warehouse for storage.
- It should be a specific, identifiable premises with a unique address. General localities don’t count.
- The place must be owned, rented or otherwise occupied legally by the business. There should be evidence like a sale deed, rent agreement, electricity bill etc.
- Day-to-day functioning and management of the business occurs at this place.
So in simple words, the place of business is the actual, physical workspace where the main business activities take place and which has a distinct address recognized by law. This is different from just a mailing address.
Why Does Place of Business Matter for GST?
Your place of business holds significance because:
- Your principal place of business serves as the primary address for obtaining GST registration. It links you with the state or union territory where you need to pay SGST or UTGST.
- Additional places of business across states have to be registered for you to expand your operations. This enables pan-India compliance.
- Your books of accounts and key financial documents must be maintained at the principal place of business. Tax officials use this address for sales visits.
- It determines the jurisdictional tax authority that will administer your GST filings and registration.
- The place of business indicates the state where you are liable to pay SGST or UTGST if it is within that state.
So in summary, the place of business has implications on registration requirements, tax payments, compliance jurisdiction, audits, and overall GST obligations. Clarity on place of business is essential.
Types of Places of Business Under GST
The GST law recognizes three types of places of business:
Principal Place of Business
The principal place of business (PoB) refers to the primary physical location where a business conducts its core operations and is registered. It typically houses key business activities like:
- Key management and decision makers
- Main accounting/finance functions
- Core manufacturing or trading activity
- Major inventory storage
- Critical suppliers or business partners
A business can have only one principal PoB per state which serves as the main address for tax purposes. Additional places can be registered once principal PoB is established if you supply goods or services from other locations.
Additional Place of Business
An additional place of business (APoB) refers to any other physical premises of a registered business apart from the principal PoB. Some instances where businesses need to register APoB:
- If you have a manufacturing plant/factory in a state apart from your office.
- For each warehouse/storage from where you supply goods.
- Branch offices, retail stores, distribution hubs in other cities.
- Co-working spaces leased to provide services.
APoBs enable you to legitimately conduct business and comply with GST across multiple locations within or even across states.
Temporary Place of Business
This refers to makeshift, temporary facilities set up by a vendor to supply goods or services for a limited duration. For instance, stalls at exhibitions, food trucks at festivals, trade show venues etc. fall under temporary place of business.
Place of business under GST refers to the actual, physical premises where key business activities are carried out.Principal place of business is the main registered address in a state for compliance.Additional places must also be registered if supplying goods or services from separate locations.Clarity on place of business is critical to meeting registration, jurisdictional compliance and tax payment obligations under GST correctly.