Rule 8 – Place of provision of services where provider and recipient are located in taxable territory :

Place of provision of a service, where the location of the provider of service as well as that of the recipient of service is in the taxable territory, shall be the location of the recipient of service.

Analysis of the rule

This rule is applicable in a situation where on application of one of the earlier rules i.e. rule 4 to 6, the place of provision of service provided in the taxable territory may be determinable to be outside the taxable territory. However, both service provider and the service receiver are located in the taxable territory.

In this case, the place of provision of service is the location of the service receiver, i.e. the place of provision will be deemed to be in the taxable territory, notwithstanding the earlier rules.

For instance, a machinery of Bahara India Ltd of Bangalore develops a technical problem in London. Bharat Machineries of Delhi deputes some engineers to undertake repairs at the site in London. But for this rule, rule 4(1) would apply in this case, and the place of provision would be London i.e. outside the taxable territory. However, by application of rule 7, since the service provider, as well as the receiver, are located in the taxable territory, the place of provision of this service will be within the taxable territory.