Under India’s GST framework, the place of supply is the critical factor that determines which tax is applicable — IGST (for inter-state or import/export transactions) or CGST + SGST/UTGST (for intra-state transactions). Charging the wrong tax is not merely a technical error — it results in revenue going to the wrong government, requiring the taxpayer to pay the correct tax again while seeking a refund of the wrongly paid tax, which is a cumbersome and time-consuming process.

The Basic Rule

If the location of the supplier and the place of supply are in the same state → CGST + SGST applies.
If they are in different states → IGST applies.

Place of Supply for Goods (Section 10, IGST Act)

Supply Involving Movement of Goods

Where the supply involves movement of goods, the place of supply is the location where the movement of goods terminates for delivery to the recipient.

Supply Without Movement of Goods

Where goods are delivered without movement (e.g., third-party delivery), the place of supply is the location of goods at the time of delivery.

Supply on Board a Conveyance

For goods supplied on board a conveyance (train, aircraft, vessel), the place of supply is the location where the goods are taken on board.

Place of Supply for Services (Section 12 and 13, IGST Act)

Services have more complex rules, with the general rule and numerous specific rules based on the nature of the service.

General Rule — B2B Transactions

For B2B services (where the recipient is registered), the place of supply is the location of the recipient as per their GST registration. This is the most commonly applied rule for professional services, consulting, IT services, etc.

General Rule — B2C Transactions

For B2C services (where the recipient is unregistered), the place of supply is the location of the supplier.

Specific Rules — Frequently Disputed Categories

Immovable Property Services

For services directly in relation to immovable property (architects, interior designers, engineers, hotel accommodation, real estate agents), the place of supply is the location of the immovable property — regardless of where supplier or recipient is located.

Restaurant and Catering Services

Place of supply is where the services are actually performed.

Transportation of Goods

For registered recipients: location of the registered recipient. For unregistered recipients: location where goods are handed over for transportation.

Online Information and Database Access Services (OIDAR)

Place of supply is the location of the recipient. This is critical for technology companies and digital service providers serving customers across states.

Why Getting Place of Supply Wrong is Costly

Consider this scenario: A Delhi-based IT company provides services to a Mumbai-registered client. The correct tax is IGST (interstate). If CGST+SGST (Delhi) is charged by mistake, Delhi receives the tax — but Maharashtra’s government has the rightful claim. The Mumbai client cannot claim CGST/SGST as ITC against their Maharashtra SGST output liability. The supplier must pay IGST additionally and seek a refund of wrongly paid CGST+SGST — a process that can take months.

Need a Place of Supply Opinion?

Kyra Advisors regularly advises businesses on the correct determination of place of supply, particularly for complex multi-state operations, digital services, and construction-related transactions. Reach out for a consultation.