Published 5 October 2026
A supplier in Mumbai sends an invoice to a customer in Mumbai, for work done on a building in Goa. Does the invoice carry CGST and SGST, or IGST? Most people would answer from the two addresses on the invoice. The Act answers from neither. The answer is IGST, and the reason is the subject of this guide.
The first guide in this series explained that intra-State supplies attract CGST and SGST, and inter-State supplies attract IGST. That leaves the question of how a supply is classified. The classification depends on two things, the location of the supplier and the place of supply, and the second of those is fixed by rules in the IGST Act that often have nothing to do with where the customer is.
Two locations, compared
Section 7 of the IGST Act treats a supply of goods as inter-State where “the location of the supplier and the place of supply” are in two different States, two different Union territories, or a State and a Union territory. Sub-section (3) says the same of services. Section 8 treats a supply as intra-State where the two are “in the same State or same Union territory”.
So the test is a comparison, and only one side of it is intuitive. The location of the supplier is usually where the supplier operates from. The place of supply is a legal conclusion, reached by applying sections 10 to 13 to the facts. Neither the invoice address nor the place of payment decides it.
For services, both locations are defined. Under section 2(15), the location of the supplier of services is the registered place of business from which the supply is made. If it is made from a fixed establishment elsewhere, it is that establishment. If it is made from more than one establishment, it is “the establishment most directly concerned with the provision of the supply”. Section 2(14) defines the location of the recipient in the same terms, by reference to where the supply is received.
Some supplies are inter-State whatever the locations
Section 7 fixes certain supplies as inter-State regardless of the comparison:
- goods imported into India, “till they cross the customs frontiers of India”
- services imported into India
- supplies where the supplier is in India and the place of supply is outside India
- supplies “to or by a Special Economic Zone developer or a Special Economic Zone unit”
The last of these surprises people. A supplier in Chennai selling to an SEZ unit in Chennai is making an inter-State supply, and section 8(1) says expressly that such a supply is not intra-State.
One business, several persons
Explanation 1 to section 8 provides that where a person has an establishment in one State and another establishment outside it, they “shall be treated as establishments of distinct persons”. Explanation 2 treats a branch, agency or representational office as an establishment in the territory where it is.
This is the IGST Act’s counterpart to section 25(4) of the CGST Act, discussed in the previous guide. A company’s Delhi office and its Haryana factory are two persons for GST. A supply between them is a supply, and it is inter-State.
Goods: where the movement ends
Section 10 fixes the place of supply of goods, other than imports and exports, which section 11 deals with. Its rules, in order:
Where the supply involves movement of goods, by anyone, the place of supply is “the location of the goods at the time at which the movement of goods terminates for delivery to the recipient”. Goods dispatched from Ahmedabad to a buyer in Indore have their place of supply in Madhya Pradesh. The supply is inter-State.
Where goods are delivered on the direction of a third person, the arrangement commonly called bill-to-ship-to, clause (b) deems the third person to have received the goods. The place of supply is that person’s principal place of business. Take a supplier in Gujarat who ships goods to a site in Maharashtra on the instruction of a buyer whose principal place of business is in Karnataka. The place of supply of the Gujarat supplier’s sale is Karnataka. Where the goods physically went does not decide it.
Where there is no movement, the place of supply is the location of the goods “at the time of the delivery to the recipient”.
Where goods are assembled or installed at site, the place of supply is the place of installation or assembly.
Where goods are supplied on board a conveyance, such as a vessel, aircraft, train or motor vehicle, the place of supply is where they are taken on board.
A further clause, (ca), would fix the place of supply for sales to unregistered buyers as the address recorded on the invoice. If no address is recorded, it would be the supplier’s location. The clause was inserted by the IGST (Amendment) Act, 2023. CBIC’s text records it as not yet brought into force.
Services within India: a default and thirteen exceptions
Section 12 applies where both the supplier and the recipient are located in India. Its structure is a default rule with a list of exceptions, and the exceptions do most of the work.
The default, in sub-section (2), applies to every service not listed in sub-sections (3) to (14):
- for a supply to a registered person, the place of supply is “the location of such person”
- for anyone else, it is the location of the recipient “where the address on record exists”, and otherwise the location of the supplier
The exceptions fix the place of supply by reference to something other than the recipient. The ones met most often are these.
Immovable property. Services “directly in relation to an immovable property” have their place of supply where the property is. This covers architects, interior decorators, surveyors, engineers and estate agents, grant of rights to use property, construction work, hotel and other lodging accommodation, and premises hired for functions. It answers the opening example: the Mumbai supplier’s work on a Goa building has its place of supply in Goa, and the supply is inter-State.
Performance-based services. Restaurant and catering, personal grooming, fitness, beauty treatment and health services have their place of supply “where the services are actually performed”.
Training and performance appraisal. For a registered person, the place of supply is that person’s location. For anyone else, it is where the service is performed.
Events. Admission to an event or amusement park is placed where the event is held or the park is located. Organisation of an event is placed at the recipient’s location if registered, and otherwise where the event is held.
Passenger transport. For a registered person, the place of supply is that person’s location. For anyone else, it is where the passenger “embarks on the conveyance for a continuous journey”. A return journey is a separate journey.
Telecommunication, banking and insurance. Each has its own rule, generally keyed to the installation address, the billing address or the recipient’s location on the supplier’s records.
Transport of goods once had its own rule, in sub-section (8). That sub-section was omitted with effect from 1 October 2023, and goods transport services within India now fall under the default rule.
Services across the border: where the recipient is
Section 13 applies where either the supplier or the recipient is located outside India. Its default, in sub-section (2), is simpler: the place of supply is “the location of the recipient of services”. If that is not available in the ordinary course of business, it is the supplier’s location.
The exceptions are fewer:
- services on goods that the recipient must make physically available to the supplier, and services needing the recipient’s physical presence, are placed where they are performed
- services in relation to immovable property are placed where the property is
- admission to, and organisation of, events are placed where the event is held
- under sub-section (8), banking services to account holders, and hiring of means of transport for up to a month, are placed at the supplier’s location
- passenger transport, and services on board a conveyance, have their own rules
- online information and database access services are placed at the recipient’s location; whether the recipient is in India is settled by a list of indicators, such as billing address, card issuer and IP address, of which any two non-contradictory ones suffice
Sub-section (8) used to carry a third entry, clause (b), “intermediary services”. It placed the services of a broker or agent in India, arranging supplies for a principal abroad, at the supplier’s own location in India. The service was therefore not an export, and tax was payable on it. Section 157 of the Finance Act, 2026 omitted clause (b). The Act defers some of its GST provisions to dates to be notified, but section 157 is not among them. So the omission took effect when the Act received assent, on 30 March 2026. It is not expressed to be retrospective. Intermediary services now fall under the default rule in sub-section (2), the location of the recipient.
Why section 13 decides whether something is an export
An export of services, under section 2(6), requires five conditions together:
- the supplier is located in India
- the recipient is located outside India
- the place of supply is outside India
- payment is received in convertible foreign exchange, or in Indian rupees where the Reserve Bank permits
- the supplier and recipient are not merely establishments of one person
The third condition is the one section 13 decides. A Pune firm of architects designing an office in London for a London client meets it under sub-section (4), because the property is outside India. The same firm designing a factory in Pune for the same client does not: the place of supply is where the property is, in India. One supplier and one client can therefore produce an export in one contract and a taxable domestic supply in another.
Section 13 sometimes cuts the other way. Services on goods that the recipient makes physically available are placed where they are performed. But a proviso excludes goods “temporarily imported into India for repairs or for any other treatment or process” and exported again without other use in India. A repair of that kind falls back to the default rule, the recipient’s location.
Working out the place of supply
The order of analysis is:
- Identify whether the supply is of goods or services, using Schedule II as discussed in the previous guide.
- For goods, apply section 10, or section 11 for imports and exports.
- For services, identify the location of the supplier and of the recipient under section 2. If both are in India, apply section 12; if either is outside, apply section 13.
- Check the specific sub-sections before the default. Most errors come from applying the default rule to a service that has its own.
- Compare the place of supply with the location of the supplier. Same State or Union territory: CGST and SGST, or UTGST. Different, or one of the fixed inter-State cases in section 7: IGST.
The next guide turns from where a supply is taxed to when: the time of supply, which fixes the tax period the liability belongs to.