Place of Supply under GST

Place of supply might sound like a technicality, but it decides one very practical thing: whether you charge CGST+SGST or IGST on a transaction — and getting it wrong is one of the most common (and costly) invoicing mistakes businesses make.

Why Place of Supply Matters

If the location of the supplier and the place of supply are in the same state, it's an intra-state supply, requiring CGST + SGST. If they are in different states, it's an inter-state supply, requiring IGST instead. Charging the wrong type of tax means the payment doesn't reach the correct state government, and can also create ITC eligibility complications for the buyer, even if the total tax amount charged is numerically correct.

Place of Supply of Goods

•      Where supply involves movement of goods (by the supplier, recipient, or a third party): the place of supply is the location where the movement of goods terminates for delivery to the recipient

•      Where there is no movement of goods (e.g., goods handed over/collected at the seller's counter or godown): the place of supply is the location of the goods at the time of delivery to the recipient

•      Where goods are assembled or installed at a site: the place of supply is the place of such installation or assembly

•      For goods imported into India: the place of supply is the location of the importer

•      For goods exported from India: the place of supply is the location outside India

Place of Supply of Services — General Rules

•      For a registered recipient: place of supply is the location of the recipient (i.e., wherever they are GST-registered)

•      For an unregistered recipient: the location of the recipient if their address is available on record with the supplier; otherwise, the location of the supplier is used as a default

Place of Supply of Services — Special Rules

•      Services related to immovable property (architecture, interior design, real estate agents, hotel accommodation, etc.): the place of supply is where the property is located

•      Restaurant, catering, personal grooming, fitness, and similar services: the place where the service is actually performed

•      Transportation of goods: place of supply is the destination of the goods (for registered recipients) or the place where goods are handed over for transportation (for unregistered recipients, subject to conditions)

•      Passenger transportation services: the place where the passenger embarks on the conveyance for a continuous journey

•      Telecommunication services: linked to the location of the installation for fixed line services, or the billing/recharge location for mobile and pre-paid services

•      Banking and financial services: the location of the recipient in the supplier's records; if not available, the location of the supplier

💡  Illustration — Immovable Property Services

A Delhi-based company hires a Mumbai-based interior designer for its office building located in Bengaluru. Even though the supplier is in Mumbai and the recipient is registered in Delhi, since the service relates to immovable property, the place of supply is Bengaluru — and since the supplier's location (Mumbai) and the place of supply (Bengaluru) are in different states, IGST applies to this transaction.

💡  Illustration — Goods Movement to a Different State

An online furniture store based in Gujarat receives an order billed to a corporate office in Gujarat, but the customer requests delivery to their branch office in Rajasthan. Since the movement of goods terminates in Rajasthan, the place of supply is Rajasthan, not Gujarat — even though the buyer's registered billing address is in Gujarat — making this an inter-state supply requiring IGST.

⚠  Common Mistakes to Avoid

•  Applying the general 'location of recipient' rule to services related to immovable property, when a special rule (location of the property) actually applies instead

•  Confusing the billing address with the place of supply for goods, when the actual delivery/shipping address is what governs it

•  Not tracking the correct delivery state for e-commerce and online orders, since customers can order from one state and have goods shipped to another

•  Assuming place of supply is always the same as the location of the supplier — this is only true as a fallback in limited situations

Frequently Asked Questions

Q1. Is place of supply the same as the location of the supplier?

A. No — they can be quite different, especially for services tied to immovable property, events, or transportation, which is exactly why specific rules exist for these categories.

Q2. Why is place of supply especially tricky for online sellers?

A. Because the buyer's shipping address (which usually determines place of supply for goods) may differ from their billing address or the state where the order was placed, so businesses must carefully track the actual delivery location for each order.

Q3. What if I get the place of supply wrong on an invoice?

A. You may end up paying tax to the wrong state (for example, CGST+SGST instead of IGST), which typically requires correction through amendment, and could delay or complicate ITC availability for your buyer.

Q4. What determines the place of supply for hotel accommodation?

A. The location of the hotel or immovable property itself, regardless of where the guest is registered for GST or where the booking was made from.

Q5. How is place of supply determined for online/digital services like software subscriptions?

A. For B2B supplies, it's generally the location of the registered recipient; for B2C digital services, specific rules based on the location of the recipient (often inferred from address, IP, payment details, etc.) apply, especially for cross-border digital service providers.

Q6. Does place of supply affect whether GST is CGST+SGST or IGST for the same total rate?

A. Yes exactly — the total rate and amount of tax remain identical either way; place of supply only determines how that tax is split (CGST+SGST vs IGST), and consequently which state receives the revenue.

✓  Key Takeaways

•  Place of supply determines whether a transaction is intra-state (CGST+SGST) or inter-state (IGST)

•  For goods, it's generally where movement terminates (the actual delivery location), not the billing address

•  For services, the default rule is the recipient's location, but many special rules exist — especially for immovable property, transportation, and telecom

•  Getting this wrong doesn't change the total tax paid, but can send it to the wrong government and complicate the buyer's ITC

Note: GST rates, thresholds and procedures are revised periodically by the GST Council and CBIC. This article reflects the position understood as of the GST 2.0 rate structure (effective 22 September 2025). Please verify current figures on www.gst.gov.in or with a qualified tax professional before making compliance decisions.
Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.