Place of supply (POS) is the location that decides whether a supply is intra-State (CGST + SGST) or inter-State (IGST). For goods it is governed by Section 10 of the IGST Act, and for services by Section 12 (supplier and recipient in India) and Section 13 (one party outside India). Charging the wrong tax head is hard to correct later.
Why place of supply matters
GST is a destination-based tax. The POS, read with the location of the supplier, decides the nature of the supply: if both are in the same State, CGST + SGST apply; if in different States, IGST applies. Charging CGST + SGST where IGST was due (or vice versa) means the correct tax must be paid afresh and the wrong tax claimed as a refund under Section 77 / Section 19 of the IGST Act — a slow, cash-blocking process.
Goods: Section 10
| Situation | Place of supply |
|---|---|
| Supply involves movement | Where movement terminates for delivery |
| Bill-to / ship-to | Principal place of business of the third party (deemed) |
| No movement | Location of goods at the time of delivery |
| Installed/assembled | Place of installation or assembly |
Services: Sections 12 and 13
The default rule (Section 12) is the location of the registered recipient; if unregistered, the address on record, else the supplier's location. Special rules override the default for immovable-property services (location of the property), events, transport, restaurant, training and others. Under Section 13 (cross-border), the default is the recipient's location, again with carve-outs.
Example. A Mumbai consultant advises a Delhi-registered company. POS is Delhi (recipient's registration), so it is an inter-State supply and IGST is charged. Had the client been an unregistered individual in Maharashtra, CGST + SGST would apply.
Common errors for finance teams
- Defaulting to CGST + SGST because the supplier and the billing address are in the same State, ignoring the recipient's GST registration State.
- Immovable-property and event services billed under the default rule rather than the special rule.
- Bill-to/ship-to transactions taxed to the ship-to State instead of the bill-to State.
- Treating exports without checking the zero-rated conditions.
Key takeaways
- POS decides intra-State (CGST+SGST) vs inter-State (IGST).
- Goods: Section 10; services: Section 12 (domestic) and Section 13 (cross-border).
- Default for services to a registered person is the recipient's location.
- Wrong tax head is correctable but cash-blocking — get it right upfront.