Place of Supply: When to Charge IGST vs CGST+SGST

One of the most common GST errors on invoices isn't the rate or the amount — it's the wrong type of tax. Charging CGST+SGST when you should charge IGST (or vice versa) means the wrong government gets the money, which cannot be corrected simply by amending the invoice. Place of supply is what determines which tax applies.

Why Place of Supply Matters

Under GST, India's tax revenue is split between the central government and the state governments. The split depends on whether a transaction is intra-state (supplier and customer in the same state → CGST+SGST) or inter-state (different states → IGST).

The place of supply (POS) is the legal concept that determines where a supply "happens" for GST purposes. It is not always where the invoice is raised or where the supplier is located. The rules are set out in Sections 10–13 of the IGST Act.

Getting POS wrong means:

• Incorrect tax type on the invoice (IGST instead of CGST+SGST or vice versa)
• Mismatch in the recipient's ITC claim
• Potential demand, interest, and penalties if noticed during audit

Goods: Where They're Delivered

For goods, the place of supply is relatively straightforward: it is the location where the goods are delivered.

• Goods delivered within the same state as the supplier → intra-state → CGST+SGST
• Goods delivered to a different state → inter-state → IGST
• Goods exported out of India → treated as inter-state → IGST (zero-rated)

If the movement of goods ends in a particular state, that state is the place of supply — regardless of where the buyer is registered or where the invoice is raised.

Services: The General Rule + Exceptions

Services are more nuanced. The general rule for B2B service supplies (where the recipient is GST-registered) is:

Place of supply = location of the service recipient

For B2C supplies (recipient is unregistered), the general rule is:

Place of supply = location of the service provider

However, there are important exceptions to the general service rule where the POS is determined differently:

Same State vs Different State → Which Tax

Putting the rules together:

The SGST component always goes to the state that is the place of supply, which is why the government cares about getting this right.

Worked Examples

Example 1 — Freelance developer, B2B: Ravi is a software developer registered in Bengaluru (Karnataka). His client, a startup, is registered in Hyderabad (Telangana). Ravi provides software development services.

POS = location of the registered recipient = Telangana. Supplier (Karnataka) ≠ POS (Telangana) → inter-state → IGST.

Example 2 — Same-state services: Priya is a graphic designer in Mumbai (Maharashtra). Her client, a restaurant chain, is also registered in Mumbai.

POS = client's state = Maharashtra. Supplier (Maharashtra) = POS (Maharashtra) → intra-state → CGST + SGST.

Example 3 — Immovable property exception: An architect registered in Delhi is hired to design a building located in Pune (Maharashtra).

POS = location of the immovable property = Maharashtra. Regardless of where the architect or client is registered → IGST if Delhi-based architect (inter-state), or CGST+SGST if the architect is also Maharashtra-registered.

Example 4 — B2C service: A yoga instructor registered in Chennai provides online classes to individual students across India. The general B2C rule applies: POS = supplier's location = Tamil Nadu → CGST + SGST for all students.

E-BillR automatically derives the place of supply from the customer's registered state on the invoice. When you select a customer's state that differs from your own, E-BillR switches to IGST; when the states match, it uses CGST+SGST. See the GST concepts guide for how this works in practice.

For the underlying framework of CGST, SGST, and IGST, CGST, SGST & IGST explained covers the mechanics. The GST invoice format guide shows where place of supply appears on a compliant invoice, and what is GST is the starting point if you're working through the fundamentals.