Glossary
What is place of supply?
The one detail on an invoice that decides which tax you charge.
Updated
In short
Place of supply is the location GST law treats as where a supply happens, deciding whether CGST and SGST or IGST applies. SimpleERP sets it from the customer and compares it with your branch's state on every invoice.
Place of supply is the location GST law treats as where a supply happens, and it decides which tax applies. If it is in the supplier's own state, CGST and SGST apply; if it is in another state, IGST applies. For goods it is generally where the movement of goods ends; for most services it is the location of a registered buyer, or of the buyer's address on record otherwise.
Place of supply: a worked example
Lakshmi Steel Furnitures is registered in Tamil Nadu (state code 33). The same steel rack at ₹4,990 is taxed differently depending on where it goes. Figures assume 18%. Rates change, so confirm the rate for your goods with your CA or the GST portal before you rely on it.
| Customer | Place of supply | Tax on ₹4,990 |
|---|---|---|
| Ravi Stores, Coimbatore | Tamil Nadu (33) | CGST ₹449.10 + SGST ₹449.10 |
| Dealer in Kochi | Kerala (32) | IGST ₹898.20 |
| Dealer in Bengaluru | Karnataka (29) | IGST ₹898.20 |
How is place of supply decided for services?
For most services between Indian parties, the place of supply is the location of the buyer if the buyer is registered, and the buyer's address on record if not. Services tied to immovable property, such as repairs to a building, follow the property's location, and a few others such as events and transport have their own rules. The place of supply guide walks through them.
FAQ
Questions, answered
Is place of supply the same as the delivery address?
For goods that you deliver, usually yes, because the place of supply is where the movement ends. It differs in bill-to-ship-to cases, where goods go to a third party on the buyer's instruction and the buyer's place of business becomes the place of supply.
Must I print the place of supply on the invoice?
The place of supply must be printed on inter-state invoices, as the state name and code, and it is good practice on every invoice. It tells the buyer and the tax officer why you charged CGST and SGST or IGST.
What if I charge CGST and SGST when it should have been IGST?
You have paid tax to the wrong head. You pay the correct tax and claim a refund of the wrong one; you are not charged interest on the correct tax for that reason. It is easier to get the customer's state right before you post the invoice.
Does the place of supply change if the customer pays from another state?
The place of supply does not change with where the customer pays from. Where the payment comes from does not matter, and neither does the bank the customer uses. For goods, what matters is where the movement ends, and for most services the buyer's registered or recorded location.
Related
Keep reading
IGST
GST at the full rate on supplies between states and on imports, collected by the centre.
Read moreCGST
The central government's half of GST on a sale within one state, charged alongside SGST.
Read morePlace of supply
How place of supply under GST decides CGST and SGST or IGST, with the rules for goods and services and six worked invoices.
Read more
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