Place of supply is the location assigned to a sale or service by GST law. Compare that location with the supplier’s location to decide which tax applies. It is not always the billing address or the place where goods are delivered.
For a taxable supply treated as within one State or Union territory, the invoice generally carries Central GST (CGST) plus State GST (SGST) or Union Territory GST (UTGST). For an inter-State supply, Integrated GST (IGST) generally applies. Check the special cases too: supplies to or by a Special Economic Zone (SEZ) unit or developer are inter-State even when both locations are in the same State.
What changes on the invoice?
- Sections 7 and 8 of the IGST Act decide whether a supply is inter-State or intra-State once the relevant locations are known.
- It affects the tax shown on the invoice. CGST Rule 46 requires the place of supply along with the name of State for inter-State supplies, and also the address of delivery where it differs from the place of supply.
- The answer can also affect whether the business qualifies for the composition scheme. See the restrictions in this CA Samaaj explanation of the GST Composition Scheme.
How to choose the right rule
- Identify whether the supply is of goods or services.
- For goods, check whether they are imported or exported. For services, check whether both parties are in India or either party is outside India.
- Check whether a specific rule applies to that type of goods or service. Use the general rule only when no specific rule takes priority.
- After fixing the place of supply, compare it with the supplier’s location and check the exceptions in sections 7 and 8; supplies to or by an SEZ unit/developer are inter-State even within the same State.
- Check that the invoice and accounting system use the correct customer address, delivery address and branch GST registration.
Goods: follow the movement and delivery instructions
For goods other than imports and exports, section 10 of the IGST Act gives the main rules. The correct clause depends on how the goods move and who controls that movement. The rules below are in IGST sections 10 and 11.
| Situation | Core rule | What to check |
|---|---|---|
| Supply involves movement of goods | Place of supply is where movement terminates for delivery to the recipient | Check where delivery ends, not just where dispatch starts |
| Bill-to ship-to model | If goods are delivered on the direction of a third person, that third person is deemed to have received the goods; place of supply is that person's principal place of business | Check who instructed the supplier to deliver to someone else; see the two-invoice example below |
| No movement of goods | Place of supply is the location of the goods at the time of delivery | Useful in transfer of title cases where goods do not move |
| Assembly or installation at site | Place of supply is the place of installation or assembly | Apply after confirming the contract is a goods supply; an immovable-property works contract is analysed as a service |
| Goods supplied on board a conveyance | Place of supply is the location where goods are taken on board | Relevant for on-board retail in aircraft, trains, or vessels |
| Goods supplied to an unregistered person | Clause (ca) overrides clauses (a) and (c), not every other goods rule | Invoice address data now matters directly |
Goods sold to a customer without GST registration
CBIC Circular 209/3/2024-GST, dated June 26, 2024, records that clause (ca) was inserted in section 10(1) with effect from October 1, 2023. Under that clause, where goods are supplied to a person other than a registered person, the place of supply is the location as per the address of that person recorded in the invoice. If no such address is recorded, the place of supply is the supplier's location.
The same circular specifically clarifies a common e-commerce fact pattern: when the billing address and the delivery address on the invoice are different for an unregistered recipient, the place of supply is the delivery address recorded on the invoice. The circular also notes that recording the name of the State is deemed to be recording the address for this clause.
Imports and exports of goods
Section 11 creates separate rules for goods crossing the border. For imported goods, the place of supply is the location of the importer. For exported goods, the place of supply is the location outside India.
Services: when both parties are in India
Use section 12 when both the service supplier and recipient are in India. First check whether the service has its own rule. See section 12.
General rule
- If the service is supplied to a registered person, the place of supply is the location of that person.
- If the service is supplied to an unregistered person, the place of supply is the recipient's location where the address on record exists; otherwise it is the supplier's location.
Services with a specific rule
- Immovable-property-linked services: place of supply is where the property, boat, or vessel is located or intended to be located; where it is outside India, section 12(3) instead uses recipient location.
- Restaurant, catering, grooming, fitness, beauty treatment, health services: place of supply is where the services are actually performed.
- Training and performance appraisal: for registered recipients, recipient location; for others, the place where actually performed.
- Admission to events: where the event is actually held or the venue is located.
- Organisation of events and sponsorship-related services: registered recipient location, or for unregistered persons the event location; if the event is outside India, section 12(7) uses recipient location.
- Passenger transport: for registered recipients, recipient location; for unregistered persons, place of embarkation for the continuous journey.
- Services on board a conveyance: first scheduled point of departure of that conveyance.
- Telecom and broadcasting categories: special address- and installation-based rules apply.
- Banking and financial services: recipient location as per supplier records; if unavailable, supplier location.
- Insurance: registered recipient location, or for others the recipient location as per supplier records.
- Government advertisement contracts covering identified States or Union territories: allocation is made across those States or Union territories.
Goods transport: section 12(8) still applies
Section 12(8) was not deleted. Where supplier and recipient are both in India, goods transport, including mail/courier, follows the registered recipient’s location; for an unregistered recipient, it follows the handover location. Only the proviso about a destination outside India was omitted from 1 October 2023. See section 12(8) and its amendment footnote.
Hypothetical application: A Maharashtra freight supplier provides a transport service to a registered Gujarat exporter for goods going to the USA. With both service parties in India, the place of supply is Gujarat under section 12(8)(a). The overseas cargo destination does not itself make the freight service an export. Tax rate, exemption and reverse-charge questions are separate checks.
When either the supplier or the recipient is outside India
Section 13 governs services where either side is outside India. The default rule is that the place of supply is the location of the recipient. If recipient location is unavailable in the ordinary course of business, supplier location applies. Specific categories can displace the default.
Important section 13 exceptions
- Services on goods that the recipient must physically provide: generally where the work is done. For such services provided remotely by electronic means, use where the goods are located at that time. Section 13(3)(a) also has an exception for goods temporarily imported for repair, treatment or processing and re-exported without other use in India; check its conditions.
- Services requiring the physical presence of an individual recipient: where actually performed.
- Immovable-property-related services: where the property is located or intended to be located.
- Admission to or organisation of events: where the event is actually held.
- Services by a bank, financial institution or non-banking financial company to account holders: supplier location. Section 13(8) gives “account” a specific meaning: an interest-bearing account, including NRE and NRO accounts. Do not extend this exception to every financial service or customer account.
- Hiring of means of transport for up to one month, including yachts but excluding aircraft and vessels: location of the supplier.
- Passenger transportation: place where the passenger embarks for the continuous journey.
- On-board passenger transport services: first scheduled point of departure.
- Online information and database access or retrieval (OIDAR) services: recipient location. Section 13(12) includes specific location tests; do not assume every service delivered online is OIDAR.
Section 13(8)(b)’s intermediary override was omitted by the Finance Act, 2026, effective 30 March 2026, as recorded in ICAI’s updated bare law, footnote 4. Use the amended provision for the relevant period; historical transactions need their own analysis. A place of supply outside India does not alone establish that every export condition is satisfied.
For goods transport where either service party is outside India, CBIC Circular 203/15/2023-GST, part A explains the section 13(2) recipient-location rule after section 13(9) was omitted on 1 October 2023, including mail and courier. It also explains the supplier-location fallback when recipient location is unavailable. Keep this cross-border service rule separate from section 12(8).
Examples: decide the place and then the tax
Example 1: Machinery installed at site
Assumptions: A supplier registered in Maharashtra sells and installs a machine at the customer's factory in Gujarat. The contract covers supply plus site installation. The machine is assembled at the Gujarat site. Assume this remains a supply of movable goods with installation, not an immovable-property works contract.
Result: Under section 10, where goods are assembled or installed at site, the place of supply is the place of installation. On these assumptions, the place of supply is Gujarat. The supplier is in Maharashtra, so the transaction is inter-State.
Example 2: Complete both invoices in a bill-to ship-to chain
Hypothetical facts: Dealer A’s principal place of business and relevant registration are in Karnataka. Manufacturer B is registered in Tamil Nadu. A buys goods from B for ₹1,00,000 and directs delivery to registered Customer C in Kerala, to whom A sells them for ₹1,20,000. Assume ordinary goods movement, an applicable 18% rate, no SEZ/import/export or other special facts.
| Invoice | Place of supply and rule | Invoice calculation |
|---|---|---|
| B to A | Karnataka: A is deemed to receive the goods under section 10(1)(b). B is in Tamil Nadu, so IGST applies. | ₹1,00,000 + 18% IGST ₹18,000 = ₹1,18,000 |
| A to C | Kerala: movement ends there for delivery to C under section 10(1)(a). A is in Karnataka, so IGST applies. | ₹1,20,000 + 18% IGST ₹21,600 = ₹1,41,600 |
The goods travel once, but there are two sales and two invoices. Work out the place of supply for each invoice separately. Keep A’s order, delivery instruction, both invoices and proof of receipt together. B’s invoice to A does not use Kerala just because the truck went there. Check input tax credit and transport documents separately.
Example 3: E-commerce supply to an unregistered customer
Assumptions: A seller registered in Delhi supplies a laptop through an e-commerce platform to an unregistered individual. The invoice shows a billing address in Delhi and a delivery address in Haryana.
Result: Based on Circular No. 209/03/2024-GST, the place of supply follows the delivery address recorded on the invoice in this fact pattern. On these assumptions, the place of supply is Haryana, so the supply is inter-State.
Example 4: Hotel accommodation booked by a registered company
Assumptions: A company registered in Karnataka books accommodation for employees at a hotel in Rajasthan.
Result: Hotel accommodation falls under the immovable-property-linked rule in section 12(3), not the general registered-recipient rule in section 12(2). The place of supply is Rajasthan because that is where the property is located.
Example 5: Domestic management consultancy
Assumptions: A consultancy firm registered in Maharashtra provides online advisory services to a GST-registered client in Telangana. No specific section 12 override applies.
Result: The general rule applies. The place of supply is the registered recipient's location, Telangana. The supplier is in Maharashtra, so the supply is inter-State.
Before issuing the invoice
Keep a short working note with the supplier’s location, the customer’s registration status and location, delivery or performance location, the rule used, and the resulting tax type. Check that these facts agree with the order and invoice.
Watch for three common mistakes: using the dispatch State instead of the correct delivery rule, treating every business-to-business service as customer-location based, and treating the removal of the overseas-destination proviso as deletion of section 12(8). For transactions from 30 March 2026, also check the change to intermediary services.
If a contract covers both goods and services, classify it under the applicable GST rules rather than splitting it simply to get a preferred place of supply. If the contract, customer registration or delivery instruction changes, revisit the calculation before issuing the next invoice.
