Place of Supply Rules: When It Is IGST, Not CGST+SGST

The place of supply is the location that GST law deems a supply to have been made to, and it is the single thing that decides whether you charge IGST or CGST plus SGST. The test is a comparison, not a lookup: put the location of the supplier next to the place of supply, and if they fall in different states or union territories the supply is inter-state and takes IGST. If they fall in the same one, it is intra-state and takes CGST plus SGST. Everything else in this article is detail about how to work out that second value.

The only test that decides IGST vs CGST+SGST

GST is a destination-based tax, and the IGST Act carries the machinery that works out where the destination is. Two definitions do the work. The location of the supplier is, broadly, the registered place of business from which the supply is actually made — the branch or godown that fulfils the order, not the head office whose address happens to sit at the top of the letterhead. The place of supply is fixed by rule, in sections 10 and 11 of the IGST Act for goods and sections 12 and 13 for services.

Once you have both, the classification follows mechanically:

• Both in the same state or union territory: intra-state supply. Charge CGST and SGST, or CGST and UTGST where the union territory has no legislature of its own.
• In different states or union territories: inter-state supply. Charge IGST as a single line.

There are supplies the law treats as inter-state regardless of geography. Supplies to or by a SEZ unit or developer are inter-state even where the SEZ sits inside the supplier's own state. So are exports, imports, and any supply where the supplier is in India and the place of supply is outside it. If you have ever seen an IGST invoice between two parties with the same state code on their GSTIN and assumed it was an error, an SEZ counterparty is the usual explanation.

Goods that move: where the movement ends

The most common case is the simplest to state. Where a supply involves movement of goods — whether the supplier moves them, the recipient moves them, or a transporter does it for either party — the place of supply is the location of the goods at the point where that movement terminates for delivery to the recipient.

The phrase that matters is "for delivery to the recipient". Intermediate stops do not count. If a Maharashtra supplier consolidates a consignment at a hub in Gujarat and then forwards it to the buyer's factory in Tamil Nadu, the movement terminates in Tamil Nadu, and place of supply is Tamil Nadu even though the goods paused in Gujarat on the way. Equally, if a Karnataka buyer's purchase order carries a Bengaluru billing address but asks for delivery to its own plant in Maharashtra, the movement ends in Maharashtra and the supply is inter-state relative to a Karnataka supplier, even though supplier and buyer share a state code.

Ex-works terms do not change the analysis in the way people often assume. If the buyer collects the goods from the supplier's premises and takes them away itself, the movement still terminates wherever the buyer takes delivery. The person paying the freight is not the test; where the goods come to rest in the recipient's hands is.

Bill-to-ship-to and the third-person rule

Bill-to-ship-to is where the general movement rule would otherwise give the wrong answer, so the IGST Act overrides it. Where goods are delivered to a recipient, or to anyone else, on the direction of a third person — whether that direction is given before or during the movement, and whether it is given as an agent or otherwise — the law deems that third person to have received the goods. The place of supply then becomes the principal place of business of that third person, not the address where the goods physically land.

In practice this splits a single physical movement into two supplies on paper:

1. Supplier to the ordering party. Place of supply is the ordering party's principal place of business, because that party gave the direction. Compare it with the supplier's location to pick the head.
2. Ordering party to the final consignee. A separate supply with its own place of supply, worked out the normal way — typically where the goods were delivered.

A worked example. A Delhi trading company buys from a Maharashtra manufacturer and asks for direct shipment to its customer in Tamil Nadu. Leg one is Maharashtra to Delhi for place-of-supply purposes: the deemed recipient is the Delhi company, so the manufacturer charges IGST. Leg two is Delhi to Tamil Nadu: the trading company raises its own invoice and charges IGST again. The goods travelled Maharashtra to Tamil Nadu once, but two invoices exist and each is tested on its own facts. Get this wrong in the other direction — the manufacturer treating the Tamil Nadu consignee as its recipient — and the Delhi company ends up on an invoice it cannot reconcile against its own GSTIN.

Situation	Place of supply
Supply involves movement	Where the movement terminates for delivery to the recipient.
Delivered on the direction of a third person (bill-to-ship-to)	Principal place of business of that third person, who is deemed to have received the goods.
No movement of goods	Location of the goods at the time of delivery to the recipient.
Goods assembled or installed at site	The place of that assembly or installation.
Goods supplied on board a conveyance	The location at which the goods were taken on board.

Goods that do not move, and goods installed at site

Where a supply does not involve movement at all — the goods are already where they need to be, and the transaction only changes who owns them — the place of supply is simply the location of the goods at the time they are delivered to the recipient. Sale of plant sitting in situ, or of stock lying in a warehouse that changes hands without leaving the shelf, falls here. The supplier's state and the buyer's state are both irrelevant to fixing the place of supply; only where the goods physically are matters.

Goods assembled or installed at site get their own rule, and it is one that catches project businesses out. The place of supply is the site of the assembly or installation. A Karnataka equipment supplier commissioning a line at a customer's Gujarat plant has a Gujarat place of supply and charges IGST, even if the customer is also registered in Karnataka and would prefer the credit there. If the customer has no Gujarat registration, the IGST charged is a real cost to it, which is exactly the kind of thing worth settling in the contract before the purchase order is cut rather than at reconciliation.

Services: the default rule for registered and unregistered recipients

For services where both supplier and recipient are in India, the default rule turns on whether the recipient is registered:

• Recipient is a registered person: place of supply is the location of that person — in practice, the state of the GSTIN quoted on the invoice.
• Recipient is not registered: place of supply is the address on record with the supplier if one exists, and the location of the supplier if it does not.

"Address on record" is doing more work than it looks. For a B2C service business, whether you captured a customer's state at the point of sale decides whether you charge IGST or your own state's CGST plus SGST. No address on record means the supply falls back to your own location and becomes intra-state by default. That is a data-capture question as much as a tax one, and it is worth auditing whichever field in your billing system feeds it.

Where the recipient is outside India, a different section applies and the general position flips to the location of the recipient, with the supplier's location as the fallback where the recipient's location is not available. That section carries its own list of exceptions, and export-of-service treatment brings in separate conditions beyond place of supply alone, so cross-border services deserve their own analysis rather than an extension of the domestic rules.

Specific-service overrides that beat the default

A long list of services is carved out of the default rule. Where an override applies, it applies regardless of whether the recipient is registered, and regardless of where their GSTIN sits. These are the ones that come up most often in ordinary business.

Service	Place of supply
Directly in relation to immovable property, including architects, surveyors, hotel and lodging accommodation	Where the immovable property is located or intended to be located.
Restaurant and catering, personal grooming, fitness, beauty treatment, health services	Where the services are actually performed.
Admission to an event, amusement park or similar place	Where the event is held or the place is located.
Organising an event, and services ancillary to it	Location of the registered recipient; where the recipient is unregistered, the place the event is actually held.
Transportation of goods, including by courier	Location of the registered recipient; where the recipient is unregistered, the place the goods are handed over for transportation.
Passenger transportation	Location of the registered recipient; where the recipient is unregistered, the place the passenger embarks for the continuous journey.
Telecommunication: fixed line, leased circuit, dish antenna	Where the line or equipment is installed for receipt of the service.
Telecommunication: post-paid mobile and internet	Billing address of the recipient on the supplier's records.
Banking, financial and stockbroking services	Location of the recipient on the supplier's records; the supplier's location where that is not available.

Two patterns are worth extracting from that table. First, anything anchored to a physical thing — a building, a venue, a telephone line — follows the thing, not the paperwork. A company registered only in Maharashtra that books a conference venue in Karnataka receives a Karnataka-place-of-supply service and will be charged Karnataka CGST plus SGST by the venue, which it cannot use. Second, several services split by registration status, so the same courier or event-management service can be inter-state for one customer and intra-state for the next purely because one produced a GSTIN and the other did not.

The specific lists in the IGST Act are longer than the table above, and some entries have been amended since they were first enacted. Where a service sits near a boundary, read the current section text on the CBIC GST portal rather than a secondary summary.

Why the wrong head means the recipient cannot claim it

The reason place of supply matters commercially, rather than only technically, is that the three heads are not interchangeable in the credit ledger. A recipient's electronic credit ledger holds IGST, CGST and the SGST of the state it is registered in. It has no compartment for another state's SGST, because that state never had a claim on that registration.

So consider a Maharashtra supplier that treats an inter-state supply to a Karnataka buyer as intra-state and bills Maharashtra CGST plus SGST. The buyer is registered in Karnataka. It cannot take the Maharashtra SGST at all — there is nowhere for it to sit — and it cannot convert the CGST into the IGST it should have been charged. The tax has been paid to the government, but from the buyer's balance sheet it is a cost, not a credit.

The failure surfaces at reconciliation. The supplier reports the invoice in GSTR-1 under the wrong head, it flows into the buyer's GSTR-2B as a mismatch against the purchase register, and the buyer's team is left holding a line it cannot claim. Credit is only available where the general conditions in the input tax credit rules are met, and an invoice carrying a tax the recipient has no ledger for does not meet them.

Fixing it is not a note in the file. The supplier has to issue a credit note against the original invoice and raise a fresh one under the correct head, and amend the corresponding entry in its GSTR-1 so the buyer's GSTR-2B reflects reality. The law does provide a mechanism to pay the correct tax and claim a refund of what was paid under the wrong head, with relief from interest on the correctly paid amount, and the refund window runs from the date the correct tax is paid rather than from the original invoice. Confirm the current section and rule text on cbic-gst.gov.in before you rely on the timeline, because the mechanics here have been amended more than once.

Practical checks before you raise or accept an invoice

Most head errors come from one of three places: the billing address being used as a proxy for the place of supply, a bill-to-ship-to chain being collapsed into one invoice, or a service override being missed. A short routine catches nearly all of them.

1. Identify the supplying location, not the head office. If your organisation has multiple registrations, the GSTIN on the invoice must be the one for the place the supply was actually made from.
2. Work out the place of supply from the transaction. For goods, ask where the movement ends. For a service, check the override list before falling back on the recipient's location.
3. Check whether a third person directed the delivery. If yes, the place of supply follows that person's principal place of business, and there are two supplies to invoice, not one.
4. Confirm the counterparty's state from their GSTIN, and confirm the GSTIN is real. A digit transposed in the state code silently flips the head. Our guide to spotting a fake GST number covers what to look for beyond the checksum.
5. Flag SEZ counterparties. Same state plus SEZ still means IGST, and this is the case people most often correct in the wrong direction.
6. Match the head at receipt. On the buying side, verify the tax head against your own registration state before the invoice enters the payment queue — the pattern described in our vendor verification workflow for accounts payable.

Verification helps at the edges of this rather than at the centre. It will not tell you where a movement terminated. It will tell you, before you post an invoice, whether the GSTIN on it is genuine, active and registered in the state the tax head assumes — which is the half of the test that is cheap to automate and expensive to get wrong quietly.

Frequently asked questions

What is place of supply under GST?

Place of supply is the location the GST law deems a supply to have been made to. It is compared against the location of the supplier: if the two are in the same state or union territory, the supply is intra-state and attracts CGST plus SGST; if they are in different states, it is inter-state and attracts IGST. The rules that fix it sit in sections 10 to 13 of the IGST Act.

Is place of supply the same as the buyer's address?

Often, but not always, and the exceptions are where mistakes happen. For goods that move, place of supply is where the movement ends for delivery to the recipient, which may not be the billing address. For services connected to immovable property or to an event, it is the property or the venue, regardless of where the customer is registered.

When do I charge IGST instead of CGST and SGST?

You charge IGST whenever the location of the supplier and the place of supply fall in different states or union territories. You also charge IGST on supplies to or by a SEZ unit or developer, on exports, and on imports, even where the two parties are physically in the same state.

Can the recipient claim input tax credit if the supplier charged the wrong head?

No. A recipient registered in one state cannot take credit of another state's SGST, and a credit ledger only accepts the head that was actually paid. The invoice has to be corrected by the supplier through a credit note and a fresh invoice under the right head before the credit becomes usable.

What happens to the tax already paid under the wrong head?

The GST law provides a mechanism to pay the correct tax and claim a refund of the tax paid under the wrong head, with relief from interest on the correctly paid amount. The time limit runs from the date the correct tax is paid rather than the original invoice date. Check the current text of the relevant section and rule on cbic-gst.gov.in before relying on the timeline.

Does the GSTIN state code tell me which head to charge?

It tells you where the counterparty is registered, which is one half of the test, and it is worth verifying rather than assuming. But the place of supply still has to be worked out from the transaction itself, because a delivery address, an installation site or an event venue can sit in a different state from the GSTIN on the invoice.