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Indirect Tax Laws and Practice · Place of Supply

Place of Supply under the IGST Act Explained

Updated 11 October 2026 · Fact-checked

Place of supply is the legal location where a supply is treated as made. You compare it with the supplier's location to decide if the supply is inter-State (IGST) or intra-State (CGST and SGST). Section 10 covers goods, and Section 12 covers services when both parties are in India.

Understand Place of Supply Basics and Scope under IGST Act

Every supply of goods or services must be taxed by the right government. Under GST, the answer depends on two locations: the location of the supplier and the place of supply. The location of the supplier is where the supplier is based. The place of supply is a legal fiction fixed by the Act. It may differ from where the goods or services physically are.

The two locations decide the tax. Under Section 7, a supply of goods is inter-State when 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. Section 7(3) says the same for services. Inter-State supply attracts IGST. When both are in the same State or Union territory, the supply is intra-State and attracts CGST and SGST (or UTGST). The place of supply also tells you which State gets the tax revenue.

The Act splits the rules by type of supply. Section 10 gives place of supply for goods other than imports and exports. Section 12 gives it for services where both the supplier and the recipient are located in India. Section 7 itself is made subject to Sections 10 and 12, so the place-of-supply rule overrides the plain idea of where goods move or where work is done. Sections 11 and 13 deal with imports and exports of goods and with services where one party is outside India. Section 14 deals with online information and database access or retrieval services. Check the exact wording of those sections before you quote them.

Within Section 10, the main rule is Section 10(1)(a): where goods move, the place of supply is where the movement ends. Other clauses cover delivery on a third person's direction, no movement, installation or assembly at site, and goods supplied on board a conveyance. Clause (ca), inserted from 1 October 2023, covers supplies to unregistered persons: the place is the address recorded in the invoice, or the supplier's location if no address is recorded. Naming only the State in the invoice counts as recording the address.

Within Section 12, the default rule is Section 12(2). For a registered recipient, the place of supply is the recipient's location. For an unregistered recipient, it is the recipient's location where an address is on record, and otherwise the supplier's location. Sub-sections (3) to (14) then give special rules for immovable property, restaurants, training, events, transport, telecom, banking, insurance and advertisement.

Key rules to remember

Inter-State test for goods (Section 7(1))
Location of supplier ≠ place of supply (different State/UT) → inter-State → IGST
Section 7(1) is subject to Section 10. Place of supply, not the movement of goods alone, decides the result.
Inter-State test for services (Section 7(3))
Location of supplier ≠ place of supply (different State/UT) → inter-State → IGST
Section 7(3) is subject to Section 12. Same State or UT on both sides means intra-State.
Goods with movement (Section 10(1)(a))
Place of supply = location of goods when movement ends for delivery to the recipient
Applies whether the supplier, recipient or any other person moves the goods.
Goods to unregistered person (Section 10(1)(ca))
Place of supply = address in invoice; if none, location of supplier
Overrides clauses (a) and (c). Naming the State in the invoice counts as recording the address.
Services default rule (Section 12(2))
Registered recipient → recipient's location. Unregistered → recipient's location if address on record, else supplier's location
Applies only where no special rule in Section 12(3) to (14) fits.
Immovable property services (Section 12(3))
Place of supply = location of the immovable property, boat or vessel
If it is outside India, the place of supply is the location of the recipient. Covers lodging and event venues.
Banking and financial services (Section 12(12))
Place of supply = location of recipient on supplier's records; else supplier's location
Applies to any person, registered or not.
Imports (Section 7(2) and 7(4))
Imported goods till they cross the customs frontier, and imported services = inter-State supply
Always attract IGST.

How to solve Place of Supply Basics and Scope under IGST Act questions

Use the same sequence for any place-of-supply question. It stops you from using the wrong section.

  1. 1Identify whether the supply is goods or services, and note the location of the supplier.
  2. 2Check where the recipient is. If the supplier or recipient is outside India, or the goods are imported or exported, the question moves out of Sections 10 and 12. Say so.
  3. 3For goods, pick the Section 10 clause that fits: movement, third-person direction, no movement, installation or assembly, or on board a conveyance. Check clause (ca) first if the buyer is unregistered.
  4. 4For services, look for a special rule in Section 12(3) to (14). If none fits, use Section 12(2).
  5. 5State the place of supply in one line with the clause number.
  6. 6Compare the place of supply with the supplier's location. Different State or UT means inter-State; same means intra-State.
  7. 7Name the tax: IGST for inter-State, CGST plus SGST/UTGST for intra-State. Add the revenue-sharing point if asked.

Quickest way: Three-line check for MCQs

When to use it: Use this in Section A when you have under two minutes per question.

  1. Mark the supplier's State and the recipient's registration status.
  2. Goods: find where delivery ends (or the invoice address for an unregistered buyer). Services: find the special rule by keyword (hotel, training, bank, insurance) or fall back on recipient's location.
  3. Compare with supplier's State. Different means IGST, same means CGST plus SGST.

Common mistakes in Place of Supply Basics and Scope under IGST Act

  • Treating the supplier's location and the place of supply as the same thing

    In ordinary sales they usually match, so students never separate them.

    Fix: Always write both locations down. The Act can fix the place of supply somewhere other than where the supplier is or where work is done.

  • Deciding inter-State supply only by where goods physically travel

    Students think of 'inter-State' as a transport idea.

    Fix: Section 7(1) is subject to Section 10. Compare the supplier's location with the place of supply fixed by the Act, not with the route of the truck.

  • Ignoring Section 10(1)(ca) for sales to unregistered buyers

    Older notes only mention clauses (a) to (e). Clause (ca) was added from 1 October 2023.

    Fix: For unregistered buyers, use the address recorded in the invoice, or the supplier's location if none is recorded. It overrides clauses (a) and (c).

  • Using Section 12(2) for services that have a special rule

    The default rule is easy to remember, so students apply it first.

    Fix: Scan sub-sections (3) to (14) first. Use Section 12(2) only when none applies.

  • Applying Sections 10 and 12 to imports, exports or cross-border services

    Students forget the section headings limit the scope.

    Fix: Section 10 excludes goods imported or exported. Section 12 applies only if both supplier and recipient are located in India. Other cases fall under other sections.

  • Treating the unregistered-recipient rule in Section 12(2) as always the recipient's location

    Students skip the 'address on record' condition.

    Fix: If no address of the unregistered recipient is on record, the place of supply is the supplier's location.

Worked examples

Example 1

Sharma Traders, registered in Jaipur (Rajasthan), sells machinery to Kaveri Industries, registered in Chennai (Tamil Nadu). Sharma Traders arranges transport and the goods are delivered at Kaveri's factory in Chennai. Determine the place of supply and the tax charged.

Show the solution
  1. Supply of goods with movement. The buyer is registered, so clause (ca) does not apply.
  2. Section 10(1)(a): place of supply is the location of goods when movement terminates for delivery to the recipient, that is Chennai, Tamil Nadu.
  3. Location of supplier is Rajasthan. Place of supply is Tamil Nadu. These are two different States.
  4. Under Section 7(1), this is an inter-State supply.

Answer: The place of supply is Tamil Nadu. The supply is inter-State, so IGST is charged.

Example 2

Meera Hotels, registered in Pune (Maharashtra), provides lodging in its Pune hotel to Arjun Pvt Ltd, a company registered in Bengaluru (Karnataka). Determine the place of supply and whether the supply is inter-State or intra-State.

Show the solution
  1. This is a service. Both supplier and recipient are located in India, so Section 12 applies.
  2. Lodging accommodation by a hotel falls under Section 12(3)(b), which has a special rule.
  3. Place of supply is the location where the immovable property is located, that is Pune, Maharashtra. The default rule of Section 12(2) (recipient's location, Karnataka) is not used.
  4. Location of supplier is Maharashtra and place of supply is Maharashtra. Both are in the same State.
  5. Under Section 7(3), a supply is inter-State only when they are in different States. So this is intra-State.

Answer: The place of supply is Maharashtra. The supply is intra-State, so CGST and SGST apply, not IGST.

Exam tips

  • Write the section and clause number next to the place of supply. Examiners give marks for naming the correct rule.
  • Always state both locations before concluding inter-State or intra-State. A one-line comparison earns the marks.
  • In case scenarios, check whether the buyer is registered. It changes the rule in several clauses, including Section 10(1)(ca) and Section 12(2).
  • Keep Section 7, Section 10 and Section 12 linked in your mind: Section 7 gives the test, Sections 10 and 12 supply the place of supply.
  • For MCQs, look for keywords such as hotel, training, bank or insurance. They point to the special rule in Section 12.

Practice questions from Place of Supply

Place of Supply Basics and Scope under IGST Act 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 Scope under IGST Act: frequently asked questions

Why is place of supply important in GST?

It decides whether a supply is inter-State or intra-State. That decides whether IGST or CGST plus SGST applies, and which State receives the tax. It is also the basis for correct invoicing and returns.

What is the difference between location of supplier and place of supply?

The location of the supplier is where the supplier is based. The place of supply is the location the Act fixes as the place where the supply is made. The two can differ, and the comparison between them decides the nature of the supply.

Which sections of the IGST Act cover place of supply?

Section 10 covers goods other than imports and exports. Section 12 covers services when both supplier and recipient are located in India. Other sections in the same chapter deal with cross-border cases and online services, so check their text before answering such questions.

Does movement of goods across a State border always make a supply inter-State?

No. Section 7(1) is subject to Section 10, so the test is the supplier's location against the place of supply. For example, goods billed to a buyer in a way that fixes the place of supply in the supplier's own State can be intra-State even if they travel elsewhere.