Taxation · Place of Supply

Place of Supply: Basics and Section 10 vs Section 12

Updated 5 October 2026 · Fact-checked

Place of supply is the place where a supply is treated as taking place under the IGST Act. You compare it with the supplier's location. Same State means intra-State, so CGST plus SGST/UTGST. Different States means inter-State, so IGST. For goods within India, Section 10 gives the rules; for services, Section 12.

Understand Place of Supply: Basics and Section 10 vs Section 12

GST is a destination-based tax. The State where goods or services are consumed should get the tax. The law needs a way to decide where a supply is "consumed". That is the place of supply.

The place of supply decides the type of tax. Compare two things: the location of the supplier and the place of supply. If both are in the same State or Union territory, the supply is intra-State (Section 8 of the IGST Act), and you charge CGST plus SGST (or UTGST). If they are in different States or Union territories, the supply is inter-State (Section 7), and you charge IGST. A supply of goods or services or both to or by a Special Economic Zone developer or an SEZ unit is a deemed inter-State supply under Section 7(5)(b). This rule applies regardless of the location comparison, even if the supplier and the place of supply are in the same State.

The IGST Act has separate sections for different supplies. Section 10 covers goods, other than goods imported or exported. Section 11 covers goods imported into or exported from India. Section 12 covers services where both the supplier and the recipient are located in India. Section 13 covers services where the supplier or the recipient is outside India.

So the first job in any question is to sort the supply: goods or services, domestic or cross-border. This topic deals with goods within India (Section 10) and shows how that differs from services within India (Section 12).

For goods, the key idea is movement. If goods move, the place of supply is where the movement ends. If they do not move, it is where the goods are at the time of delivery. Special rules apply for third-party (bill-to ship-to) deliveries, installation or assembly, and supplies on board a conveyance.

Key rules to remember

Inter-State supply test: Location of supplier ≠ Place of supply (different State/UT) → IGST. Exception: supply to or by an SEZ developer or SEZ unit → deemed inter-State → IGST, whatever the locations; Section 7 of the IGST Act. A supply of goods or services or both to or by an SEZ developer or SEZ unit is a deemed inter-State supply under Section 7(5)(b). This rule applies regardless of the location comparison.
Intra-State supply test: Location of supplier = Place of supply (same State/UT) → CGST + SGST/UTGST; Section 8 of the IGST Act.
Goods with movement (Section 10(1)(a)): Place of supply = location of goods when movement terminates for delivery to the recipient; It does not matter who arranges the transport: supplier, recipient or anyone else.
Goods delivered on a third person's direction (Section 10(1)(b)): Place of supply = principal place of business of the third person; Applies where the supplier delivers the goods to a recipient or any other person on the direction of a third person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to the goods or otherwise. The roles are: the supplier delivers; the person who receives the goods physically is the recipient or other person (the ship-to party); and the person who gives the direction is the third person. The place of supply is the third person's principal place of business. This is the bill-to ship-to case: the buyer who places the order and directs the supplier to deliver to its own customer is the third person (the bill-to party), so the buyer's principal place of business is the place of supply.
Goods without movement (Section 10(1)(c)): Place of supply = location of the goods at the time of delivery to the recipient; Example: goods that stay in a warehouse and are delivered there.
Goods assembled or installed at site (Section 10(1)(d)): Place of supply = place of installation or assembly; Applies when the supply includes installation or assembly at the recipient's site.
Goods supplied on board a conveyance (Section 10(1)(e)): Place of supply = location where the goods are taken on board; In practice, a conveyance means a vessel, aircraft, train or motor vehicle. The test is where the goods are taken on board, not where the journey ends.
Section 10 vs Section 12: Section 10: goods (not import/export). Section 12: services where supplier and recipient are both in India.; Section 11 is for goods imported or exported. Section 13 is for services where the supplier or recipient is outside India.

How to solve Place of Supply: Basics and Section 10 vs Section 12 questions

Use the same sequence for every place-of-supply question on goods. It keeps your answer in the provision, facts, conclusion format.

1Classify the supply: goods or services? Domestic, or import/export? Section 10 applies only to goods that are not imported or exported.
2Note the location of the supplier (the State or UT of the supplier).
3Check whether the goods move. Look for words like dispatched, delivered, shipped, installed, assembled or supplied on board.
4Check for a third person. If the supplier delivers on the direction of a third person, apply Section 10(1)(b) and use that person's principal place of business.
5Apply the matching clause of Section 10(1) and write the place of supply as a State or UT.
6Compare the supplier's location with the place of supply. Different means inter-State; same means intra-State.
7Conclude with the tax: IGST for inter-State, CGST plus SGST/UTGST for intra-State. Quote the section you used.

Quickest way: Three-question shortcut for goods

When to use it: Use this for MCQs and for the first line of any written answer.

Ask: where does the delivery end? Delivery end point is the place of supply in most cases.
Ask: did anyone other than the buyer direct the delivery? If yes, the place of supply is that person's principal place of business, not the delivery point.
Ask: is anything installed or assembled, or sold on board a vehicle? If yes, use the installation site or the boarding point.
Compare with the supplier's State. Different means IGST, same means CGST plus SGST. For MCQs, cross out options that give the wrong tax type first.
In a written answer, use four lines: Provision (section and clause), Facts (supplier location, delivery point), Place of supply, Conclusion (tax type). This earns step marks even if a number is wrong.

Common mistakes in Place of Supply: Basics and Section 10 vs Section 12

Using the buyer's billing address as the place of supply for goods that move.
Students link the invoice address with the place of supply.
Fix: For goods that move, use where movement terminates. The buyer's billing address is never the test. Only in a third-person direction case does the place of supply become the third person's principal place of business.
Ignoring the third person in a bill-to ship-to case and using the delivery State.
The delivery rule is learnt first, and the exception is missed.
Fix: Look for the phrase "on the direction of" or "deliver to X as instructed by Y". If present, apply Section 10(1)(b).
Comparing the recipient's State with the supplier's State instead of the place of supply.
Students assume the recipient's State and the place of supply are always the same.
Fix: Always compare the supplier's location with the place of supply. The recipient's State can differ from the place of supply.
Applying Section 12 to goods or Section 10 to services.
Both sections cover supplies within India and the numbers get mixed up.
Fix: Remember: Section 10 is for goods, Section 12 is for services. Sections 11 and 13 are the cross-border pair for goods and services.
Treating an SEZ supply as intra-State because the SEZ is in the same State.
Students look only at the physical State.
Fix: A supply of goods or services to or by an SEZ developer or SEZ unit is inter-State under Section 7(5)(b) of the IGST Act, so IGST applies.
Stating the place of supply as a city or a country, not a State or UT.
The facts name a city.
Fix: Convert the city into its State or UT, because the inter-State test works at State or UT level.

Worked examples

Example 1

Alpha Traders, registered in Delhi, sells goods worth ₹2,00,000 to Beta Ltd., registered in Jaipur (Rajasthan). The goods are transported by a transporter hired by Beta Ltd. and delivered at Beta's godown in Jaipur. Assuming a GST rate of 18%, determine the place of supply and the GST payable.

Show the solution

Provision: this is a domestic supply of goods, so Section 10 of the IGST Act applies.
Facts: the supply involves movement of goods. Movement terminates at Jaipur, Rajasthan. It does not matter that the recipient arranged the transport.
Place of supply under Section 10(1)(a) is Rajasthan.
Supplier's location is Delhi and place of supply is Rajasthan. They are different States, so this is an inter-State supply under Section 7.
IGST = ₹2,00,000 × 18% = ₹36,000.

Answer: The place of supply is Rajasthan. It is an inter-State supply, so IGST of ₹36,000 is payable. CGST and SGST are not charged.

Example 2

Surat Textiles (Gujarat) receives an order from Mumbai Garments (principal place of business in Mumbai, Maharashtra) for goods worth ₹5,00,000. On Mumbai Garments' instruction, Surat Textiles delivers the goods directly to Mumbai Garments' customer in Indore (Madhya Pradesh). Assuming a GST rate of 5%, determine the place of supply of the goods supplied by Surat Textiles and the tax payable.

Show the solution

Provision: domestic supply of goods, so Section 10 applies.
Facts: Mumbai Garments (the bill-to party) places the order and directs Surat Textiles to deliver the goods to another person, its customer in Indore (the ship-to party). Surat Textiles delivers to that other person on the direction of Mumbai Garments, so Mumbai Garments is the third person. Section 10(1)(b) applies.
The place of supply is the third person's principal place of business. That is the principal place of business of Mumbai Garments, which is Mumbai, Maharashtra.
Supplier's location is Gujarat and place of supply is Maharashtra. They are different, so this is inter-State.
IGST = ₹5,00,000 × 5% = ₹25,000.
Note: the delivery to Indore does not decide the place of supply of this supply. The delivery point is used only for the separate onward supply from Mumbai Garments to its customer.

Answer: The place of supply is Maharashtra. The supply is inter-State, so Surat Textiles charges IGST of ₹25,000.

Exam tips

Check the first word of the question: goods or services. This one decision picks Section 10 or Section 12 and avoids wrong-section answers.
Underline the supplier's State, the delivery point and any third person in the facts. Most questions are solved from these three items.
Always end with the tax type (IGST or CGST plus SGST/UTGST). Examiners look for this conclusion, and it is the usual MCQ answer.
In written answers quote the section and clause, for example Section 10(1)(b), before the working. Quote a clause number only when you are sure of it, and otherwise describe the rule in words.
Watch for SEZ, installation at site and on-board supplies. These small details are common in 2-mark MCQs.

Practice questions from Place of Supply

Place of Supply: Basics and Section 10 vs Section 12 in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Place of Supply: Basics and Section 10 vs Section 12: frequently asked questions

What is place of supply under the IGST Act?

It is the place where a supply of goods or services is treated as taking place for GST. It decides whether the supply is inter-State or intra-State. That in turn decides whether IGST or CGST plus SGST/UTGST applies.

What does Section 10 of the IGST Act deal with?

Section 10 gives the place of supply of goods other than goods imported into or exported from India. It covers goods that move, goods that do not move, third-person directed deliveries, goods installed or assembled at site, and goods supplied on board a conveyance.

What is the difference between Section 10 and Section 12 of the IGST Act?

Section 10 applies to goods, while Section 12 applies to services where the supplier and the recipient are both located in India. Imports and exports of goods fall under Section 11. Services with a supplier or recipient outside India fall under Section 13.

Is the place of supply always the recipient's State?

No. For goods that move, it is where the movement ends, and in a third-person case it is that third person's principal place of business. Read the facts and apply the correct clause of Section 10.