One of the most consequential decisions in any GST invoice is also one of the most misunderstood: the place of supply. It determines whether you charge IGST (integrated tax) or CGST + SGST (central + state tax). Charge the wrong one and the consequences land on both sides — you may have to pay the correct tax with interest, and your customer can lose the input tax credit they thought they had.
The core rule
The principle is simple even if the application isn’t:
- If the location of the supplier and the place of supply are in the same state → it is an intra-state supply → CGST + SGST.
- If they are in different states (or one is outside India) → it is an inter-state supply → IGST.
So the whole question reduces to: where is the place of supply? And that is answered differently for goods and for services.
Place of supply of goods
For most goods, the place of supply is where the movement of goods ends for delivery to the recipient. Where there is no movement, it is the location of the goods at the time of delivery. Special rules apply to “bill-to / ship-to” transactions, goods assembled or installed at site, and goods supplied on board a conveyance.
The bill-to / ship-to trap
When A in Maharashtra bills B in Maharashtra but ships the goods to C in Karnataka on B’s instruction, the law deems the place of supply for the A→B leg to be B’s principal place of business. This is exactly where businesses misclassify and charge the wrong tax head.
Place of supply of services
The default rule for services is:
- Supply to a registered person → place of supply is the location of that recipient.
- Supply to an unregistered person → generally the location of the recipient if their address is on record, otherwise the location of the supplier.
But many services have specific override rules — immovable property, restaurant and catering, admission to events, transportation, telecom, banking, and more — where the place of supply is fixed by the nature of the service rather than by the recipient’s location.
| Scenario | Place of supply | Tax |
|---|---|---|
| Supplier in UP, goods delivered in UP | Uttar Pradesh | CGST + SGST |
| Supplier in UP, goods delivered in Maharashtra | Maharashtra | IGST |
| Consulting to a registered client in Delhi (supplier in UP) | Delhi | IGST |
| Work on immovable property located in UP | Uttar Pradesh | CGST + SGST |
Why getting it wrong is expensive
If you charged CGST + SGST when IGST was due (or vice versa), the position is not simply “tax is tax.” You may need to pay the correct tax, claim a refund of the wrongly paid tax, and manage interest in between. Your customer’s credit can be disturbed for the period. The cleanest path is to determine the place of supply correctly at invoicing — not to fix it at the annual return.
Place-of-supply rules contain many service-specific exceptions. If your supplies cross state lines, involve bill-to/ship-to chains, or touch immovable property, have the position reviewed before you set your invoicing logic.