GST glossary
Place of supply
The place of supply is the state where GST law treats a sale as taking place. It decides the tax on the invoice. When it is the seller's own state, CGST and SGST are charged. When it is another state, IGST is charged, and the tax goes to the state where the goods or services are used.
Why it matters to your business
GST is a destination tax. Getting the place of supply right puts the tax in the right state, lets your customer use the credit, and keeps your GSTR-1 free of amendments. Getting it wrong means paying tax twice until a refund comes through.
How it works
As of October 2026:
- Compare the place of supply with the state of your own GSTIN. Same state: CGST and SGST. Different state: IGST.
- Goods that move: where the movement ends. Goods that do not move: where they are when handed over. Goods assembled or installed at site: the site.
- Services to a registered customer: the customer’s location.
- Services to an unregistered customer: the customer’s address on record, else your location.
- Special cases: immovable property (where it stands), restaurants and personal services (where performed), passenger transport (where the journey starts), events (where held).
- An inter-state tax invoice must name the place of supply with the state.
An example
A Bengaluru furniture maker with a Karnataka GSTIN sells tables to a dealer registered in Mumbai. The dealer asks for them to be delivered straight to the dealer’s own customer, a hotel in Mysuru. The goods never leave Karnataka, but they are delivered to a third person on the dealer’s instruction, so the place of supply for the maker’s invoice is Maharashtra, the dealer’s state, and the tax is IGST. Had the dealer taken delivery in Mysuru for itself, the place of supply would be Karnataka, with CGST and SGST.
Common mistakes
- Using the buyer’s billing state when the buyer itself takes delivery in another state.
- Charging IGST to a customer in your own state because their head office is elsewhere.
- Ignoring the special rules for property-related services.
- Leaving the place of supply off an inter-state invoice.
Questions about Place of supply
How is the place of supply decided for goods?
It is where the movement of the goods ends for delivery to the buyer. If goods go from Pune to Indore, the place of supply is Madhya Pradesh, wherever the buyer's office is.
What about a bill-to, ship-to sale?
When you deliver goods to someone else on your buyer's instructions, such as a dealer who asks you to send the goods straight to their customer, the place of supply for your invoice is your buyer's own state, the one you bill to.
How is it decided for services?
For a registered customer, it is the customer's location. For an unregistered customer, it is the address on your records, or your own location if you have no address. Some services have their own rule, such as work on a building, where it is the state of the building.
What happens if I charge the wrong tax?
You must pay the correct tax and claim a refund of the wrong one. Charging CGST and SGST on an inter-state sale also leaves your customer with credit they may not be able to use.
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