Place of supply decides whether a supply is intra-state (CGST+SGST) or inter-state (IGST). For goods that move, it is where the movement ends; for goods without movement, where they are on delivery. For most services it is the recipient's location if registered, otherwise the recipient's address on record or the supplier's location. Specific rules cover immovable property, events, restaurants, transport and services involving foreign parties.
Place of supply is the single decision that tells you whether an invoice carries CGST + SGST or IGST. Get it wrong and the tax goes to the wrong government, your customer may lose input tax credit, and fixing it requires paying again and claiming a refund.
The rules are in sections 10 to 13 of the IGST Act. This guide walks through them in plain English, with the cases small businesses meet most often.
What is place of supply and why does it matter?
The IGST Act compares two things:
- Location of the supplier — your registered place of business.
- Place of supply — determined by the rules below.
If both are in the same state or union territory, the supply is intra-state and attracts CGST + SGST (or UTGST). If they are in different states, it is inter-state and attracts IGST. Exports, imports and supplies to SEZs are inter-state by definition. The CGST vs SGST vs IGST guide explains what changes for credits once you have the answer.
Which set of rules you use depends on:
| Supplier and recipient | Goods | Services |
|---|---|---|
| Both in India | Section 10 | Section 12 |
| Import or export | Section 11 | Section 13 (supplier or recipient outside India) |
How is the place of supply decided for goods?
Section 10 of the IGST Act covers domestic supplies of goods:
| Situation | Place of supply |
|---|---|
| Goods move (by supplier, recipient or anyone else) | Location where movement terminates for delivery to the recipient |
| Bill-to-ship-to: goods delivered to a third person on the direction of a buyer | Principal place of business of the buyer who directed the delivery |
| No movement of goods | Location of the goods at the time of delivery |
| Goods assembled or installed at site | Place of installation |
| Goods supplied on board a vessel, aircraft, train or vehicle | Place where the goods were taken on board |
For imports, the place of supply is the location of the importer; for exports, it is outside India.
Bill-to-ship-to example
A Pune machine trader (Maharashtra) sells a machine for ₹5,00,000 at 18% to a Hyderabad buyer (Telangana), who asks for it to be delivered directly to the buyer's customer in Nagpur (Maharashtra).
- The goods move from Pune to Nagpur, but on the direction of the Hyderabad buyer.
- Place of supply is the buyer's principal place of business: Telangana.
- Supplier in Maharashtra, place of supply in Telangana → IGST ₹90,000, invoice total ₹5,90,000.
The Hyderabad buyer then invoices its Nagpur customer; the place of supply on that second invoice is Maharashtra, where the goods were delivered, so it charges IGST from Telangana to Maharashtra.
How is the place of supply decided for services within India?
Section 12 has a general rule and a list of specific rules that override it.
The general rule
| Recipient | Place of supply |
|---|---|
| Registered person | Location of the recipient (as registered) |
| Unregistered person, address on record | Location of the recipient per the address on record |
| Unregistered person, no address on record | Location of the supplier |
So for most B2B services — consulting, software development, design, accounting — the place of supply is simply the customer's registered state.
The main specific rules
| Service | Place of supply |
|---|---|
| Services directly in relation to immovable property (construction, architect services for a site, hotel accommodation, renting) | Where the property is located |
| Restaurant, catering, personal grooming, fitness, beauty, health services | Where the service is actually performed |
| Training and performance appraisal | Registered recipient: recipient's location; otherwise where performed |
| Admission to events, amusement parks and similar | Where the event or park is located |
| Organising events | Registered recipient: recipient's location; otherwise where the event is held |
| Transport of goods (including mail and courier) | Registered recipient: recipient's location; otherwise where goods are handed over for transport |
| Passenger transport | Registered recipient: recipient's location; otherwise where the passenger embarks |
| Telecom and DTH | Rules based on installation address, billing address or recharge location |
| Banking and financial services | Location of the recipient on the supplier's records, otherwise the supplier's location |
| Insurance | Registered recipient: recipient's location; otherwise recipient's address on record |
| Advertising services to government bodies | Apportioned across states where the ads are disseminated |
Section 13 has a parallel set of rules where the supplier or recipient is outside India — for many services the place of supply is the recipient's location, which is what makes them exports.
Worked examples for common service businesses
- A Bengaluru IT firm bills a registered Chennai client ₹2,00,000 for software development. General rule, registered recipient → Tamil Nadu. Supplier in Karnataka → IGST 18% = ₹36,000.
- A Mumbai architect designs a factory in Gujarat for a Mumbai-registered company, fee ₹3,00,000. Service directly related to immovable property → place of supply is Gujarat, where the factory is. Supplier in Maharashtra → IGST ₹54,000, and the client's ability to use that credit depends on its own registrations.
- A Jaipur event company sells concert tickets worth ₹1,000 each for a show in Jaipur to buyers from Delhi. Admission to an event → place of supply is Rajasthan. CGST + SGST, regardless of where the buyers live.
- A Kochi training institute trains staff of a registered Pune company at a Kochi venue for ₹1,20,000. Registered recipient → Maharashtra. Supplier in Kerala → IGST. The same course sold to an unregistered individual would be taxed where performed: Kerala, CGST + SGST.
- A Delhi courier picks up a parcel for an unregistered sender in Delhi bound for Lucknow. Unregistered recipient → place where goods are handed over: Delhi → CGST + SGST.
How does place of supply work for exports and imports?
When either side is outside India, sections 11 and 13 apply.
Goods. For imports, the place of supply is the location of the importer, and IGST is collected at customs along with customs duty. For exports, the place of supply is outside India. An Indian exporter treats the sale as a zero-rated, inter-state supply — under a Letter of Undertaking without tax, or with IGST paid and refunded.
Services. The default under section 13 is the location of the recipient. So a Pune software firm billing a client in Singapore has a place of supply outside India, and if the other export conditions are met, it is an export of services. But section 13 also has exceptions, for example:
| Service | Place of supply under section 13 |
|---|---|
| Services on goods physically made available by the recipient (repairs, testing) | Where the services are actually performed |
| Services directly related to immovable property | Where the property is located |
| Admission to or organising events | Where the event is held |
| Intermediary services | Location of the supplier |
| Hiring of means of transport up to one month | Location of the supplier |
| Online information and database access (OIDAR) | Location of the recipient |
The intermediary rule regularly surprises Indian agents earning commission from foreign principals: because the place of supply is the supplier's location in India, such services are generally not exports and attract IGST.
Export of services — the five conditions
A supply of services is an export only if: the supplier is in India, the recipient is outside India, the place of supply is outside India, payment is received in convertible foreign exchange (or in Indian rupees where RBI permits), and the supplier and recipient are not merely establishments of the same person.
How to apply place of supply rules on every invoice
- Identify goods or services, and whether any party is outside India.
- Check if a specific rule applies (property, event, restaurant, transport, etc.). Specific rules override the general rule.
- If none applies, use the general rule: movement termination for goods, recipient location for services.
- Compare with your own state (first two digits of your GSTIN).
- Charge CGST+SGST or IGST and print the place of supply, with state name and code, on the invoice.
- Report the same place of supply in GSTR-1 and the e-invoice.
A quick reference for place of supply on goods
| Situation | Place of supply |
|---|---|
| Goods moved by supplier or buyer | Where movement ends for delivery to the recipient |
| Bill-to-ship-to on a third party's instruction | Principal place of business of the person who orders (the "bill-to" party) |
| Goods not moved (e.g. sold where they lie) | Location of the goods at the time of delivery |
| Goods assembled or installed at site | Place of installation or assembly |
| Goods supplied on board a vessel, aircraft or train | Where the goods are taken on board |
Use the table before raising the invoice, not after the e-way bill is generated, because the tax head on both must agree.
Common mistakes with place of supply
- Using the customer's billing address for goods delivered to a different state on the customer's direction — check the bill-to-ship-to rule.
- Charging IGST on hotel or venue charges because the customer is from another state. Property-related services are taxed where the property is.
- Applying the B2B rule to B2C supplies of services without checking the address on record.
- Treating SEZ supplies as intra-state. They are always inter-state.
- Leaving the place of supply blank or defaulting it to your own state in the invoice template.
- Assuming foreign client = export. Export of services needs all the conditions in the IGST Act, including payment in convertible foreign exchange (or INR where RBI permits).
Billing Software by Betterwork stores each customer's GSTIN and state, suggests the place of supply and applies the matching tax head automatically, while still letting you override it for property-related or bill-to-ship-to cases. Try it with your own invoices on the features page.
Key takeaways
- Place of supply vs supplier location decides CGST+SGST (same state) or IGST (different states).
- Goods: where movement ends; bill-to-ship-to on a buyer's direction uses the buyer's principal place of business.
- Services: recipient's location for registered recipients; specific rules override for property, events, restaurants, transport and more.
- Exports, imports and SEZ supplies are always inter-state.
- Print place of supply with state on inter-state invoices and keep it consistent in GSTR-1 and e-invoices.
This guide is general information, not tax advice. Rules last checked on 20 October 2026; confirm with your tax professional for your situation.