goods and service tax

Published on 11 April 2025

Place of Supply in GST: Rules, Examples & 2025 Updates Explained

Understanding Place of Supply in GST: A Practical Guide

Ever wondered why your GST bill sometimes splits into CGST and SGST, and other times it’s just IGST? The answer lies in a concept called the Place of Supply. Let’s break down what this means, why it matters, and what’s changed recently—without getting lost in legal jargon.

What Exactly Is Place of Supply?

Think of Place of Supply as the “where” in a GST transaction. It’s the location that decides which type of GST applies:

  • Intra-state supply (within the same state or union territory): You’ll see CGST and SGST—each making up half of the GST rate.
  • Inter-state supply (between different states or union territories): Here, IGST steps in, and the tax goes to the central government.

So, knowing the Place of Supply isn’t just a technicality—it determines who gets your tax money and which GST rules you need to follow.

How Place of Supply Works: The Essentials

Let’s walk through the main rules, section by section, with real-life scenarios.

Section 10: Goods (Not Imports/Exports)

  • Goods on the Move: If you’re shipping goods, the Place of Supply is where the journey ends. For example, if you send products from Delhi to Mumbai, Mumbai is the Place of Supply.
  • Bill-to-Ship-to (Third-Party Orders): Imagine a company in Bangalore orders goods, but asks you to deliver them to Chennai. Here, Bangalore (the third party’s business location) is the Place of Supply.
  • No Movement: If goods aren’t moving (say, you sell a machine that the buyer picks up from your warehouse), the Place of Supply is where the goods are at the time of delivery.
  • Assembly or Installation: If you’re installing equipment at a client’s site, the Place of Supply is that very site.
  • Onboard Supplies: Selling snacks on a train? The Place of Supply is where the goods are loaded onto the train.

New from October 2023:

Supplying to someone who isn’t registered under GST? The Place of Supply is now the delivery address on the invoice. If there’s no delivery address, your (the supplier’s) location is used.

Section 11: Imports and Exports

  • Imports: The Place of Supply is where the importer is located. So, if you’re importing goods to Chennai, Chennai is the Place of Supply.
  • Exports: It’s simple—the Place of Supply is the location outside India where the goods are headed.

Section 12: Services (Both Parties in India)

  • General Rule: If your customer is registered, their location is the Place of Supply. If not, it’s your own business location.
  • Immovable Property: Services related to buildings or land? The Place of Supply is where the property is.
  • Hotels and Accommodation: The Place of Supply is where the hotel or vessel is located.
  • Performance-Based Services: For services like training or events, if your client is registered, their location is used; if not, it’s where the event happens.
  • Transport of Goods: For registered customers, it’s their location; for unregistered, it’s where the goods are handed over.
  • Banking, Insurance, Telecom: If the supplier has the recipient’s address, that’s the Place of Supply. If not, it’s the supplier’s location.
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