What is place of supply under GST?

Place of supply under GST is the state (or union territory) where the law treats a supply as made. It decides which tax goes on your invoice. If your business location and the place of supply are in the same state, you charge CGST + SGST (or CGST + UTGST). If they are in different states, you charge IGST.

The rules are in Sections 10 to 14 of the IGST Act, 2017. This guide explains them in plain language for Indian MSMEs, with invoice examples. It is an explainer, not tax advice. Confirm unusual cases with your chartered accountant.

Why place of supply matters on every invoice

Place of supply is not just a field you fill in. It controls three things:

• Tax type: CGST + SGST for an intra-state supply, IGST for an inter-state supply.
• Which state gets the tax: GST is a destination-based tax, so revenue goes to the state where the supply is consumed.
• Your buyer's input tax credit: If you charge the wrong tax type, your buyer's credit and your returns will not match cleanly.

For an inter-state supply, the tax invoice must show the place of supply along with the name of the state. Most businesses show it on every invoice, with the state code, so the tax split is easy to check.

Two words you need first

• Location of supplier: Your registered place of business from where you make the supply.
• Place of supply: The state the law points to, using the rules below.

Compare the two. Same state means intra-state. Different states means inter-state.

Place of supply of goods (Section 10)

For goods supplied within India, these are the main rules:

• Goods move to the buyer: Place of supply is where the movement ends for delivery to the recipient. Ship from Mumbai to a buyer in Bengaluru and the place of supply is Karnataka.
• Goods do not move: Place of supply is where the goods are when the buyer takes delivery. A buyer collecting stock from your Pune godown means the place of supply is Maharashtra.
• Bill to one party, ship to another: When goods are delivered to someone else on the direction of a third person, the place of supply is the principal place of business of that third person — the one who gave the instruction, not where the goods landed.
• Goods assembled or installed at site: Place of supply is where they are installed. A machine installed at a factory in Gujarat has Gujarat as the place of supply.
• Goods supplied on board a train, ship or aircraft: Place of supply is where the goods were taken on board.

Imports and exports follow a separate rule (Section 11). Exports are zero-rated supplies, and imported goods attract IGST.

Place of supply of services (Section 12)

When both supplier and recipient are in India, start with the general rule:

• Service to a registered person: Place of supply is the location of that registered person.
• Service to an unregistered person: Place of supply is the buyer's location if you have their address on record. Without an address on record, it is your own location as the supplier.

Many services have their own rule instead. The ones MSMEs meet most often:

• Services linked to immovable property (construction, renting, hotel stays): the location of the property.
• Restaurant, catering, beauty, fitness and health services: where the service is actually performed.
• Training and performance appraisal: the recipient's location if registered. If the recipient is unregistered, where the service is performed.
• Admission to an event (concert, exhibition, sports match): where the event is held.
• Goods transport services: the recipient's location if registered. If unregistered, where the goods are handed over for transport.

Services where the supplier or recipient is outside India follow Section 13. That is common for exports of services and needs case-by-case checking.

Worked examples for small businesses

All examples assume an 18% GST item or service and a supplier registered in Maharashtra.

1. Sale to a buyer in Pune. Location of supplier is Maharashtra and the goods end their journey in Maharashtra. Intra-state, so the invoice shows CGST 9% + SGST 9%.
2. Sale to a buyer in Bengaluru. Goods end their journey in Karnataka. Inter-state, so the invoice shows IGST 18%, with place of supply "29-Karnataka".
3. Bill-to-ship-to. A trader in Gujarat orders goods from you and asks you to ship them directly to the trader's customer in Pune. The Gujarat trader directed the delivery, so the place of supply on your invoice to that trader is Gujarat, even though the truck stops in Pune. Inter-state, so IGST 18%.
4. Consulting for a registered client in Delhi. General services rule: the recipient is registered in Delhi. Inter-state, so IGST 18%.
5. A Delhi customer eats at your Mumbai restaurant. Restaurant services follow the place of performance, which is Maharashtra. Intra-state, so CGST + SGST at the restaurant rate that applies to you.

Common place of supply mistakes

• Using the buyer's billing address for goods when the delivery state is different. For goods, delivery usually decides it — except in the bill-to-ship-to case above.
• Charging IGST on every sale to a buyer from another state. A buyer from Delhi who collects goods from your Mumbai shop is an intra-state supply.
• Leaving the state blank for unregistered customers. For services, a missing address can change the place of supply to your own location. For inter-state sales to consumers, the place of supply still has to be reported in your return.
• Wrong state codes in party masters. One wrong code repeats the same error on every invoice to that party.

What if you charged the wrong tax?

Suppose you charged CGST + SGST on a supply that was really inter-state, or IGST on one that was really intra-state. The law's answer is to pay the correct tax and claim a refund of the tax wrongly paid (Section 77 of the CGST Act and Section 19 of the IGST Act). You do not pay interest on the correct tax in that case. Moving the amount from one tax head to another is not allowed, so it is far cheaper to get the place of supply right on the invoice.

How billing software helps

Most place-of-supply errors start in the party master, not in the law. When your business state and each customer's state are saved correctly, the tax split follows the place of supply on every bill instead of depending on memory.

Billoxy is GST billing and invoicing software for Indian MSMEs. Expense bills and sales documents (where configured) carry a place of supply, and tax is split into CGST + SGST or IGST from it. That keeps your invoices, your buyer's credit and your returns aligned — your CA still reviews the edge cases.

Related Billoxy guides

• Difference between CGST, SGST and IGST
• What is a GST invoice?
• How to claim input tax credit under GST
• What is reverse charge mechanism under GST?
• What is an e-way bill in GST?

Official sources

• IGST Act, Section 10 — place of supply of goods (CBIC)
• CBIC GST
• GST portal

FAQs

Is place of supply the same as the delivery address?

Not always. For goods that move, it is usually where delivery ends. But in a bill-to-ship-to deal it is the principal place of business of the person who directed the delivery, and for services it often depends on the recipient's location instead.

Who decides the place of supply, the seller or the buyer?

The law decides it, through Sections 10 to 14 of the IGST Act. The seller applies those rules and shows the result on the tax invoice. The buyer should check it, because a wrong tax type affects their input tax credit.

What is the place of supply for a service to an unregistered customer?

The customer's location, if their address is on your records. If you have no address on record, the place of supply is your own location as the supplier.

Do I need to show place of supply on an intra-state invoice?

The invoice rules specifically require it for inter-state supplies, along with the state name. Showing it on every invoice is good practice, because it makes the CGST + SGST split easy for your buyer and your CA to verify.

Does place of supply apply to the composition scheme?

Composition dealers cannot make inter-state outward supplies of goods under the scheme, and they issue a bill of supply instead of a tax invoice. Place of supply still matters on their purchases. Confirm your case with your CA.

What to do next

Need one GST invoice with the right place of supply now? Use the free GST invoice generator. For everyday GST billing, invoicing and inventory for Indian MSMEs, start with Billoxy (10-day trial).