Place of supply: where your sale is taxed
The rule that decides CGST+SGST vs IGST vs zero-rated export, for goods and services
Place of supply is the GST rule that decides where a sale is taxed, and therefore which tax you charge: CGST plus SGST when the place of supply is in your own state (intra-state), IGST when it is in another state (inter-state), or nothing where it is outside India and the conditions for a zero-rated export are met. For services the default is the recipient's location (especially for a registered business customer), with special rules for immovable property, restaurant and performance-based services, events and transport. For goods it is broadly where the movement terminates for delivery. A significant recent change: the omission of Section 13(8)(b) from 30 March 2026 means intermediary services to foreign recipients now follow the recipient-location default and qualify as zero-rated exports.
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Guidance, not advice. We explain the rules, we don't assess your situation. Always seek financial or tax advice from your accountant, or contact Income Tax Department. Read our editorial scope →
Why place of supply matters
Getting place of supply right is what tells you which tax to charge. If the place of supply is in your own state, you charge CGST plus SGST; if it is in another state, you charge IGST; if it is outside India and the supply meets the export conditions (recipient abroad, paid in foreign exchange), it is a zero-rated export with no GST charged. Charging the wrong combination, CGST/SGST when it should have been IGST, or vice versa, is a common error that creates reconciliation and credit problems for both you and your customer, so the place-of-supply test comes before you decide the tax on any inter-state or cross-border supply.
Services: recipient location, with special rules
For services where both parties are in India (Section 12), the default place of supply is the recipient's location, cleanest for a registered business customer (so an inter-state B2B service is IGST at the customer's location). For an unregistered customer it is the recipient's address if on record, else your location. Special categories override the default: services relating to immovable property are taxed where the property is; restaurant, catering and personal services where performed; training and performance-based services at the recipient's location for B2B but where performed for B2C; events at the recipient location (B2B) or event location (B2C); and passenger transport at the place of embarkation. So identify whether a special rule applies before falling back to the default.
Goods, and cross-border (the intermediary fix)
For goods, the place of supply is broadly where the movement of the goods terminates for delivery to the recipient; where there is no movement, the location at the time of delivery; and a bill-to-ship-to sale is treated as supplied to the third party who directs it. Imports are taxed at the importer's location (IGST), and exports are zero-rated. For cross-border services (one party outside India, Section 13) the default is again the recipient's location. The notable change: Section 13(8)(b), which had fixed the place of supply for intermediary services at the supplier's location (denying export status to many agents, BPOs and KPOs), was omitted by the Finance Act 2026 from 30 March 2026, so intermediary services to foreign recipients now follow the recipient-location default and are zero-rated exports. Characterise your contract carefully (main supplier on your own account, not a middleman) and keep the GST and any transfer-pricing positions aligned.
tipYour service is taxed where your customer is, not where you sit. Serve a foreign client directly and it can be a zero-rated export, and from 30 March 2026 even an intermediary to a foreign client gets export treatment, the rule that used to tax them is gone.
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Calculators
Source / notes
- IGST Act 2017 s.12 (place of supply of services, domestic) + s.13 (cross-border services)
- IGST Act 2017 s.10 (place of supply of goods) + s.16 (zero-rated export)
- IGST Act 2017 s.13(8)(b) (intermediary) omitted by the Finance Act 2026, effective 30 March 2026
Frequently asked questions
What is place of supply and why does it matter?+
It is the GST rule that decides where a sale is taxed, and so which tax you charge: CGST plus SGST if the place of supply is in your own state, IGST if it is in another state, and zero-rated if it is a qualifying export outside India. Charging the wrong one creates reconciliation and input-credit problems, so it is the first test on any inter-state or cross-border supply.
How do I know if I charge CGST+SGST or IGST?+
By the place of supply. For a service, the default is the recipient's location, so a registered business customer in another state means the place of supply is there, and you charge IGST; a customer in your own state means CGST plus SGST. Special rules apply for immovable property, restaurant and performance services, events and transport. For goods, it is broadly where the movement ends for delivery.
Is a service to a foreign client taxed?+
Often not, it can be a zero-rated export. For cross-border services the default place of supply is the recipient's location (Section 13(2)), so a service to a recipient outside India, paid in foreign exchange, can be a zero-rated export with no GST charged. And since Section 13(8)(b) was omitted from 30 March 2026, even intermediary services to foreign clients now qualify, the rule that previously taxed them in India is gone.
Where is the place of supply for goods?+
Broadly where the movement of the goods terminates for delivery to the recipient. Where there is no movement, it is the location of the goods at delivery. A bill-to-ship-to transaction is treated as supplied to the third party who directs the delivery. Imports are taxed at the importer's location under IGST, and exports are zero-rated. The movement-and-delivery test is what decides the inter-state versus intra-state tax on goods.
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