Guide — India GST
Place of supply under GST in India — the rules, with examples
Every GST determination in India answers three questions in order: is the supply inter-state or intra-state, who is liable to pay, and at what rate. The first of those is decided entirely by the place-of-supply rules in the IGST Act 2017. Get it wrong and the wrong tax head is charged — CGST/SGST where IGST was due, or the reverse — which means the tax has been paid to the wrong government and a credit dispute follows. This guide walks through the rules exactly as our determination engine applies them.
The classification step
Inter-state or intra-state comes first
Sections 7 and 8 of the IGST Act classify the supply by comparing the supplier's location with the place of supply. Different states means inter-state and a single IGST charge; the same state means intra-state and the CGST + SGST split.
Inter-state supply — s.7
Supplier and place of supply are in different states or union territories (or one of them is outside India). The supplier charges IGST at the full slab rate, and the centre settles the state's share behind the scenes. Imports are always treated as inter-state supplies.
Intra-state supply — s.8
Supplier and place of supply are in the same state or union territory. The charge splits equally into CGST and SGST/UTGST. Note the exception: supplies to or by a Special Economic Zone are always inter-state, even within the same state.
Sections 10 & 11
Place of supply of goods
For goods, the rules mostly follow physical movement. Section 10 covers domestic supplies; section 11 covers imports and exports.
| Scenario | The rule | Section | Worked example |
|---|---|---|---|
| Goods move to the buyer | Place of supply is where the movement ends — the delivery location. | IGST Act 2017, s.10(1)(a) | A Telangana manufacturer ships machinery to a buyer in Maharashtra. Movement ends in Maharashtra, so the supply is inter-state and IGST applies. |
| Bill-to / ship-to (third-party delivery) | Place of supply is the third party's principal place of business, deemed as if the goods were delivered to them. | IGST Act 2017, s.10(1)(b) | A Kolkata trader buys from a Hyderabad supplier but asks for delivery to their customer in Chennai. The place of supply is Kolkata (the bill-to party), so the Hyderabad supplier charges IGST to Kolkata. |
| No movement of goods | Place of supply is where the goods are located at the time of supply. | IGST Act 2017, s.10(1)(c) | Goods already sitting in a Karnataka warehouse are sold in place. Location is Karnataka — if the supplier is also in Karnataka, CGST + SGST apply. |
| Goods imported into / exported from India | Imports: place of supply is the importer's location. Exports: the destination outside India. | IGST Act 2017, s.11 | An import into India by a Tamil Nadu importer is an inter-state supply taxed under IGST on import, regardless of the foreign supplier's location. |
Sections 12 & 13
Place of supply of services
Services have no movement to follow, so the rules follow the recipient by default, with overrides for property, events, performance and transport. Section 12 applies when both parties are in India; section 13 when one is outside.
| Scenario | The rule | Section | Worked example |
|---|---|---|---|
| General rule — both parties in India | To a registered recipient: their location. To an unregistered recipient: their address on record, else the supplier's location. | IGST Act 2017, s.12(2) | A Hyderabad consultancy bills a registered client in Gujarat. The place of supply is Gujarat, so the service is inter-state and IGST applies even though no goods moved. |
| Services related to immovable property | Place of supply is where the property is located (or intended to be located). | IGST Act 2017, s.12(3) | An architect in Delhi designs a building in Rajasthan. The place of supply is Rajasthan — the property's location overrides the general rule. |
| Cross-border services | Default is the recipient's location; specific categories (property, performance, goods-related) follow their own rules. | IGST Act 2017, s.13 | An Indian firm provides software services to a US company. The place of supply is outside India, so it is an export of services — zero-rated with LUT or refund of IGST paid. |
Why it matters
The cost of charging the wrong head
If you charge CGST + SGST on a supply that was actually inter-state, the tax is paid to governments that were never owed it. The correct fix is to pay IGST again and claim a refund of the wrongly paid amount — months of working capital tied up, plus the recipient's input tax credit is questioned in the meantime.
The same logic runs in reverse for the reverse charge: once the place of supply fixes the tax head, the liability rules decide whether the supplier charges the tax or a registered recipient self-accounts for it. Place of supply is the input every later step depends on.
Rates and section references above reflect the statutory position as of 1 January 2026. This guide is educational and is not tax advice for a specific transaction — complex cases (works contracts, OIDAR, goods sold in transit) deserve a reviewed opinion.