Last updated: 23 July 2026. Every GST invoice makes one decision before it makes any other: IGST, or CGST + SGST? That choice is not about where your customer's office is, or where the payment comes from. It is decided by a statutory concept called the place of supply — and getting it wrong is one of the few GST errors you cannot fix with a simple amendment. Here is how the rules actually work.
Applicability Note: This guide is based on GST provisions applicable as of 23 July 2026. Place of supply provisions sit in Sections 10 to 13 of the IGST Act, 2017 and are amended by Finance Acts. Always verify the current position on gst.gov.in or with a GST professional before filing.
Who Should Care?
- Anyone billing outside their own State — the moment a supply crosses a State line, the tax head changes.
- Service providers with remote or online clients, where the "where did this happen" question has no obvious physical answer.
- Exporters and intermediaries — Section 13(8)(b) was omitted on 30 March 2026, and that changes the answer for commission and agency work.
- Anyone doing bill-to/ship-to, where goods physically move to one State but are billed to a buyer in another.
1. Why This One Field Matters More Than It Looks
Charge CGST + SGST where IGST was due, and you have not made a labelling error. You have paid the right amount of money into the wrong tax heads, in the wrong government's account. Your customer's GSTR-2B will carry the wrong split, and their ITC claim inherits the problem.
The law does provide a way out. Section 77 of the CGST Act, 2017, read with Section 19 of the IGST Act, 2017, lets you pay the correct tax and claim a refund of the one paid in error — and it expressly says no interest is payable on that correct payment. But that is a refund application, with its own timeline and its own scrutiny. Getting the field right the first time is considerably cheaper than being right in the end.
2. The Two-Step Test
There is no rule that says "IGST applies to inter-State sales" and stops there. The tax head is derived, in two steps:
- Find the location of the supplier. Usually the registered place of business from which the supply is made.
- Find the place of supply using Sections 10–13 of the IGST Act.
Then compare:
| Location of supplier vs place of supply | Type of supply | Tax charged |
|---|---|---|
| Same State / UT | Intra-State (Section 8, IGST Act) | CGST + SGST/UTGST |
| Different States / UTs | Inter-State (Section 7, IGST Act) | IGST |
Note what is not in the test: your customer's billing address, where the money came from, or where the contract was signed. Only the two locations above.
3. Goods: Section 10
For goods supplied within India, the place of supply follows the physical movement, not the paperwork:
| Situation | Place of supply | Provision |
|---|---|---|
| Supply involves movement of goods | Where the movement terminates for delivery to the recipient | Sec 10(1)(a) |
| Bill-to / ship-to (delivered on a third person's direction) | Principal place of business of that third person | Sec 10(1)(b) |
| No movement of goods | Location of the goods at the time of delivery | Sec 10(1)(c) |
| Goods installed or assembled at site | The site of installation or assembly | Sec 10(1)(d) |
| Goods supplied on board a conveyance | Where the goods were taken on board | Sec 10(1)(e) |
Bill-to/ship-to is where most people slip
A Maharashtra supplier is told by a Karnataka buyer to deliver goods to a warehouse in Gujarat. It is tempting to look at the truck and call it Gujarat. Under Section 10(1)(b), the place of supply for the supplier's invoice is the principal place of business of the Karnataka buyer — the person who gave the direction. So the supplier charges IGST (Maharashtra → Karnataka). The Karnataka buyer then makes its own onward supply to Gujarat, and that leg is billed separately.
Installation is decided by the site, not the seller
Machinery shipped from Tamil Nadu and installed at a plant in Odisha has its place of supply in Odisha under Section 10(1)(d) — regardless of where the invoice is addressed.
4. Services Within India: Section 12
Where both supplier and recipient are in India, Section 12 applies. Start with the default in Section 12(2):
- Recipient is registered → place of supply is the location of that registered person. Simple, and it covers most B2B services.
- Recipient is unregistered → the address on record with the supplier; if there is no address on record, the location of the supplier. With effect from 1 October 2023, where the invoice for an unregistered recipient records the name of the State, that recorded State is treated as the address on record — which is why online sellers now ask an unregistered buyer to pick a State at checkout.
The exceptions that override the default
The default only applies if none of the named exceptions do. These are the ones that come up most:
| Service | Place of supply | Provision |
|---|---|---|
| Immovable property — architects, interior designers, hotel accommodation, works on a building | Location of the property | Sec 12(3) |
| Restaurant, catering, personal grooming, fitness, beauty, health services | Where the service is performed | Sec 12(4) |
| Training and performance appraisal | Registered recipient → recipient's location; unregistered → where performed | Sec 12(5) |
| Admission to an event, amusement park or premises | Where the event or premises is located | Sec 12(6) |
| Organising an event, and related sponsorship | Registered recipient → recipient's location; unregistered → where the event is held | Sec 12(7) |
| Transportation of goods, including courier | Registered recipient → recipient's location; unregistered → where goods are handed over for transportation | Sec 12(8) |
| Passenger transportation | Registered recipient → recipient's location; unregistered → where the passenger embarks | Sec 12(9) |
| Telecommunication, cable, DTH, broadcasting | Fixed line/dish → installation address; post-paid mobile → billing address; pre-paid → where the voucher is sold | Sec 12(11) |
| Banking, financial and insurance services | Location of the recipient on the supplier's records; if not available, the supplier's location | Sec 12(12) |
An architect in Delhi designing a building in Jaipur charges IGST — the place of supply is Rajasthan under Section 12(3), because the property is there. It does not matter that the entire design was done at a desk in Delhi, or that the client's office is in Delhi too.
Outbound freight changed in 2023
The proviso to Section 12(8) — which fixed the place of supply for transporting goods to a destination outside India as that foreign destination — was omitted with effect from 1 October 2023 by the Finance Act, 2023. Where both the transporter and the customer are in India, outbound freight now follows the ordinary Sec 12(8) rule: for a registered customer, the place of supply is the customer's location.
5. Cross-Border Services: Section 13
When the supplier or the recipient is outside India, Section 13 takes over. The default in Section 13(2) is the location of the recipient — and where the recipient's location is not available in the ordinary course of business, the location of the supplier.
The main exceptions: services requiring physical presence of the goods or the person (Sec 13(3)) go to where they are performed; services relating to immovable property (Sec 13(4)) go to the property; admission to or organisation of events (Sec 13(5)) goes to where the event is held.
The intermediary rule changed on 30 March 2026
This is the big one for anyone earning commission from an overseas principal.
Until March 2026, Section 13(8)(b) deemed the place of supply of intermediary services to be the location of the supplier. For an Indian agent earning commission from a foreign company, that meant the place of supply was India — so the service failed the export test, could not be zero-rated, and attracted GST even though the money came from abroad. It was litigated for years.
Section 13(8)(b) was omitted by Section 157 of the Finance Act, 2026, which received Presidential assent on 30 March 2026, giving effect to a recommendation of the 56th GST Council meeting held on 3 September 2025. Section 157 carried no separate commencement date, so the omission operates from the date of assent.
The consequence: intermediary services now fall to the default rule in Section 13(2) — the location of the recipient. Where the recipient is outside India, the place of supply is outside India, and the supply can qualify as an export of services and be zero-rated, provided the other conditions in Section 2(6) of the IGST Act (payment in convertible foreign exchange, supplier and recipient not merely establishments of the same person, and so on) are satisfied.
Two cautions. First, this is prospective — it does not by itself resolve the treatment of periods before 30 March 2026. Second, the definitional question has not gone away: whether you are an intermediary at all, or a principal supplying a service on your own account, is still decided on the tests in CBIC Circular No. 159/15/2021-GST dated 20 September 2021 — three parties, two distinct supplies, and the intermediary not supplying the main service on its own account. Verify the current position before you file a zero-rated claim on this basis.
Section 13(9), which had fixed the place of supply of goods-transportation services at the destination of the goods, was separately omitted with effect from 1 October 2023 by the Finance Act, 2023; those services now also fall to the Sec 13(2) default.
6. Four Mistakes That Keep Recurring
- Using the billing address as the place of supply. For a registered recipient it often coincides — but for immovable property, events, restaurants and installation, the statute points somewhere else entirely.
- Treating bill-to/ship-to as a supply to the ship-to State. Section 10(1)(b) points to the third person who gave the delivery direction, not the delivery address.
- Assuming payment in foreign currency makes it an export. It does not. Export of services needs the place of supply to be outside India and the other Section 2(6) conditions met.
- Fixing a wrong head by editing the next invoice. Tax paid under the wrong head is unwound through the Section 77 / Section 19 refund route, not by netting it off later.
Key Takeaways
- The tax head is derived from two facts: location of supplier and place of supply. Same State → CGST + SGST (Sec 8); different States → IGST (Sec 7).
- Goods (Sec 10) follow the movement — except bill-to/ship-to, which follows the third person's principal place of business, and installation, which follows the site.
- Domestic services (Sec 12) default to the registered recipient's location — but immovable property, events, restaurants and transport have their own named rules that override it.
- Cross-border services (Sec 13) default to the recipient's location.
- Intermediary services: Section 13(8)(b) was omitted by the Finance Act, 2026 with effect from 30 March 2026 — the place of supply is now the recipient's location, opening the door to zero-rating for overseas principals.
- Wrong head paid? Section 77 CGST / Section 19 IGST gives a refund route, with no interest on the correct payment — but it is a claim, not a correction.
Frequently Asked Questions
How do I decide between IGST and CGST + SGST?
Compare the location of the supplier with the place of supply determined under Sections 10–13 of the IGST Act. If both are in the same State or UT, it is an intra-State supply under Section 8 and you charge CGST + SGST/UTGST. If they are in different States or UTs, it is an inter-State supply under Section 7 and you charge IGST.
In a bill-to/ship-to transaction, which State is the place of supply?
Under Section 10(1)(b) of the IGST Act, where goods are delivered to a recipient on the direction of a third person, the place of supply for that invoice is the principal place of business of the third person who gave the direction — not the State where the goods were physically delivered.
I'm an architect in one State working on a property in another. Which tax applies?
Services directly relating to immovable property have their place of supply at the location of the property under Section 12(3). If the property is in a different State from your location, you charge IGST — regardless of where the work was actually carried out.
Has the place of supply for intermediary services changed?
Yes. Section 13(8)(b), which fixed the place of supply of intermediary services at the supplier's location, was omitted by Section 157 of the Finance Act, 2026, effective from its Presidential assent on 30 March 2026. Intermediary services now follow the default rule in Section 13(2) — the location of the recipient — so services to an overseas recipient can qualify as an export and be zero-rated if the other conditions in Section 2(6) of the IGST Act are met. Whether you are an intermediary in the first place is still tested on CBIC Circular No. 159/15/2021-GST dated 20 September 2021.
I charged CGST + SGST when IGST was due. How do I fix it?
Section 77 of the CGST Act read with Section 19 of the IGST Act allows you to pay the correct tax and claim a refund of the tax paid under the wrong head, and provides that no interest is payable on the correct payment. It is a refund application, not a self-correction in a later return, so raise it with your advisor rather than adjusting it against a future liability.
Does the customer's billing address decide the place of supply?
Only in some cases. For services to a registered person the default under Section 12(2) is the recipient's location, which usually matches. But for immovable property, admission to events, restaurant and grooming services, and goods installed at a site, the statute fixes the place of supply somewhere specific, and the billing address is irrelevant.
Disclaimer: This article is for informational purposes only and does not constitute professional tax advice. GST rules are subject to frequent changes through notifications and circulars. Please consult a qualified tax professional or verify the current provisions on the official GST portal (gst.gov.in) before making any compliance decisions.
Unsure whether a supply is inter-State, or whether your commission income now qualifies as an export? Our GST experts can help → gstconsultancy.com