The place of supply is the state where GST treats a sale as taking place. It decides two things: whether the invoice carries CGST and SGST or IGST, and which state receives the tax. If the supplier's state and the place of supply are the same, the sale is intra-state. If they differ, it is inter-state.
The rules are in sections 10 to 13 of the Integrated Goods and Services Tax Act, 2017. Section 10 covers goods and section 12 covers services within India. Sections 11 and 13 cover imports and exports.
01Goods: section 10
| Situation | Place of supply |
|---|---|
| Goods move to the buyer | Where the movement ends for delivery |
| Bill to one party, ship to another | Principal place of business of the party who gives the instructions and is billed |
| Goods do not move | Where the goods are when delivered to the buyer |
| Goods assembled or installed at site | Where they are assembled or installed |
| Goods put on board a train, ship or aircraft | Where they are taken on board |
Example: an ordinary sale
A Morbi tile maker in Gujarat sells 500 boxes to a dealer in Indore. The goods travel to Indore, so the place of supply is Madhya Pradesh. The invoice carries IGST and shows "Place of supply: Madhya Pradesh (23)".
Example: bill to ship to
A Rajkot pump maker receives an order from a Pune dealer, who asks for the pumps to be sent straight to a farmer near Rajkot. The pump maker bills the Pune dealer and ships within Gujarat.
The place of supply for the pump maker's sale is Maharashtra, the Pune dealer's principal place of business, so it charges IGST even though the truck never leaves Gujarat. The Pune dealer then makes its own sale to the farmer, with its own place of supply.
02Services: section 12
The general rule
| Recipient | Place of supply |
|---|---|
| Registered | Location of the recipient |
| Unregistered, address on record | That address |
| Unregistered, no address on record | Location of the supplier |
An Ahmedabad CA firm advising a registered company in Jaipur charges IGST, because the recipient is in Rajasthan.
Services with their own rule
| Service | Place of supply |
|---|---|
| Related to immovable property: construction, architects, interior design, hotel stays, property rent | Where the property is |
| Restaurant and catering, beauty, health, fitness | Where the service is performed |
| Training and performance appraisal | Registered recipient's location, otherwise where performed |
| Admission to an event, fair, park or exhibition | Where the event or place is |
| Organising an event | Registered recipient's location, otherwise where the event is held |
| Transport of goods, including courier | Registered recipient's location, otherwise where the goods are handed over for transport |
| Passenger transport | Registered recipient's location, otherwise where the passenger boards |
Example: interior work in another state
An Ahmedabad interior design firm designs a client's new office in Mumbai. The client is registered in Gujarat. Interior design is a service related to immovable property, so the place of supply is Maharashtra, where the office is. The firm charges IGST.
Example: a hotel bill
A Surat textile company sends staff to a trade fair in Goa. The Goa hotel charges CGST and SGST of Goa, because the place of supply is the hotel's location. The Surat company, registered only in Gujarat, cannot use Goa CGST and SGST as credit. Large companies that travel often sometimes register in states where they spend heavily, or accept that this tax is a cost.
03Online sales to consumers in other states
A Jaipur block-print seller ships a ₹2,400 kurta to a customer in Bengaluru. The goods are delivered in Karnataka, so the place of supply is Karnataka and the invoice carries IGST. Each such sale is reported by state in GSTR-1 and in Table 3.2 of GSTR-3B, and Karnataka receives the tax. Getting the state right on every consumer order matters even when the amounts are small.
04Exports and imports
For services to a recipient outside India, the general rule is the recipient's location, which makes it an export when the other conditions are met. Some services, such as those performed on goods physically in India or related to immovable property in India, follow other rules and may not count as exports.
On GST returns and e-invoices, a place of supply outside India is shown as code 96. The exporting without IGST guide covers how exports are billed.
05What the invoice must show
Rule 46 of the CGST Rules requires the place of supply, with the name of the state, on every inter-state invoice. Many businesses print it on every invoice, which avoids confusion when a buyer's billing and delivery addresses are in different states.
06Mistakes and how they are fixed
- Using the delivery address for a registered service recipient. For services under the general rule, the recipient's registered location decides. Where the work is done does not change it.
- Taking the buyer's billing state for goods when the goods were delivered elsewhere on the buyer's own account.
- Charging IGST on a hotel or event that should be intra-state.
If you charged the wrong tax, you pay the right one and claim a refund of the wrong one. No interest is charged on the right tax when you pay it this way. The CGST, SGST and IGST guide covers this.
07Keeping addresses right
Record both the billing and the delivery state for each customer, and the GSTIN state for registered clients. Most place of supply errors start in the customer master.
This guide is general information as of October 2026 and does not amount to tax advice.
MatruOS reads the supplier and customer states on each invoice and applies CGST and SGST or IGST to match.