What is Place of Supply?

How it works

For goods it is governed by Section 10 and for services by Sections 12 and 13 of the IGST Act. Comparing the place of supply with the supplier's location decides the tax to charge.

The rules that cover 90% of cases

Goods: place of supply is where movement terminates (Section 10 IGST Act); bill-to/ship-to transactions deem the supply to the bill-to party's location. Services (domestic, Section 12): default is the recipient's location if registered; specific overrides for immovable property (property location), events (venue), passenger transport, and restaurant/personal services. Cross-border services (Section 13): default is the recipient's location, with performance-based, property-based and intermediary exceptions.

Worked example

A Mumbai architect designs an office building in Bengaluru for a Delhi-registered client. Immovable-property override: place of supply is Karnataka. The Mumbai supplier charges IGST (Maharashtra to Karnataka), and the Delhi client receives credit in… Karnataka — where it may have no registration. This is the classic PoS trap: the override can strand ITC in a state where the recipient has no presence, and the fix (registration, or restructuring who contracts) must happen before the invoice, not after.

Why it decides real money

Wrong PoS means wrong tax type (CGST+SGST instead of IGST or vice versa) — and Section 77/19 refund-and-repay is the only cure: pay the correct tax, claim refund of the wrong one (no interest where bona fide, but a full cash cycle). Intermediary characterisation (place of supply = supplier's location, killing export status) remains the most litigated single PoS issue for India's services sector.

This content is for general guidance only and does not constitute professional advice. Tax law changes frequently — verify the current position and consult a qualified Chartered Accountant before acting. Last reviewed: June 2026.