Nov 30, 2025
Under GST, knowing the place of supply determines which tax applies — CGST & SGST (intra-state) or IGST (inter-state).
An incorrect determination can lead to wrong tax payment, ITC denial, or notices.
This article explains how Place of Supply (POS) works for goods and services, along with special cases like e-commerce, exports, and online services.
Why Place of Supply Matters
GST is destination-based — tax goes to the state where goods or services are consumed, not where they originate.
That’s why the correct POS decides whether a transaction is intra-state or inter-state.
1️⃣ Place of Supply for Goods
Type of Supply | Place of Supply | Tax Applicable |
|---|---|---|
Goods sold within the same state | Location of buyer | CGST + SGST |
Goods sold to another state | Location of buyer | IGST |
Goods delivered to third party (bill-to-ship-to) | Location of billed party | IGST |
Exports | Place outside India | Zero-rated supply |
2️⃣ Place of Supply for Services
For services, rules depend on the location of supplier and recipient.
Type of Service | Place of Supply |
|---|---|
B2B (business-to-business) | Location of recipient |
B2C (business-to-customer) | Location of supplier |
Immovable property-related | Location of property |
Event or training services | Place where event occurs |
Online/digital services | Recipient’s address or IP-based location |
3️⃣ Special Cases
a. E-commerce Sales
The POS depends on delivery address of the buyer.
If the buyer is in another state, IGST applies.
b. Exports and SEZ Supplies
Exports and supplies to SEZ are zero-rated, meaning you can claim refund of ITC or pay tax and claim rebate.
c. Import of Services
Recipient in India must pay IGST under reverse charge.
4️⃣ Common Errors to Avoid
❌ Charging CGST/SGST for inter-state supply.
❌ Using supplier location instead of recipient for B2B services.
❌ Not maintaining documentation for exports or SEZ supplies.
Conclusion
Understanding “place of supply” is crucial to paying the right tax and maintaining ITC eligibility.
A small classification error can create a big compliance gap — especially for e-commerce and service-based businesses.
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