Place of Supply: The Rule That Decides CGST+SGST or IGST

The basic test

Compare the location of the supplier with the place of supply. Same State means central tax plus State tax, in equal halves. Different States, or an export, or a supply to an SEZ, means integrated tax at the full rate.

Note that the recipient's address is not the test. The place of supply is determined by statutory rules, which sometimes point somewhere other than where the customer sits.

Goods

1. Where the supply involves movement: the location where movement terminates for delivery to the recipient.

2. Bill-to ship-to: the place of supply is the principal place of business of the third party who directed the delivery, not the physical delivery address.

3. Where there is no movement: the location of the goods at the time of delivery.

4. Goods assembled or installed at site: the place of installation or assembly.

5. Goods supplied on board a conveyance: the location where they are taken on board.

Services: the default and the exceptions

The default under Section 12(2) is the location of the registered recipient, or for an unregistered recipient the address on record, failing which the supplier's location.

The exceptions matter more than the default. Services relating to immovable property, including architects, interior decorators, hotel accommodation and event venues, take the location of the property. Restaurant, catering, personal grooming and fitness services take the place of performance. Training and performance appraisal to an unregistered person takes the place of performance. Admission to an event takes the venue. Transportation of passengers takes the place of embarkation. Telecommunication services have their own detailed rules by type of connection.

Cross-border services

Where either the supplier or the recipient is outside India, Section 13 applies instead. The default is the recipient's location, with exceptions for services requiring physical presence of goods or individuals, immovable property, events, banking, intermediary services and transport hire.

The intermediary rule is a recurring source of dispute for Indian firms serving foreign principals, because an arrangement characterised as intermediary services has its place of supply in India and is therefore taxable rather than an export.

Correcting a mistake

A wrong tax head cannot be fixed by relabelling. Issue a credit note for the original invoice and a fresh invoice with the correct head. Where tax was paid under the wrong head, Section 77 of the CGST Act and Section 19 of the IGST Act allow a refund of the wrongly paid tax without interest, provided the correct tax is paid.

The refund is available, but the timing cost and the customer's blocked credit in the interim are real.

Frequently asked questions

### How do I know whether to charge IGST or CGST and SGST?

Compare your location as supplier with the place of supply determined under the statutory rules. Same State means central plus State tax; different States, exports and SEZ supplies mean integrated tax. The customer's billing address is not by itself the test.

### What is the place of supply in a bill-to ship-to transaction?

The principal place of business of the third person who directed the goods to be delivered, not the physical delivery address. This deeming provision in Section 10(1)(b) exists precisely because the two differ.

### What if I charged the wrong tax head?

Issue a credit note and a corrected invoice. Section 77 of the CGST Act and Section 19 of the IGST Act permit a refund of the tax wrongly paid under the incorrect head, without interest, once the correct tax is paid.

### Where is the place of supply for services to a foreign client?

Section 13 applies, and the default is the recipient's location, which would make it an export. Several exceptions bring it back to India, most notably the intermediary services rule, which is where most disputes about exported services arise.