What Is Place of Supply Under GST?
Place of supply is the rule set in the Integrated Goods and Services Tax Act, 2017 (IGST Act) that decides where, for GST purposes, a supply of goods or services is deemed to happen. That location — not the seller's factory or the buyer's head office — decides three things at once: whether Central GST plus State GST (CGST+SGST) applies or Integrated GST (IGST) applies, whether the transaction is treated as domestic or cross-border, and whether an outbound service can be zero-rated as an "export of services." Get it wrong and the consequence is not a rounding error: an exporter can lose the zero rating on an entire invoice, or a foreign company can find its Indian agent has created an unregistered, taxable presence.
How Place of Supply Fixes CGST+SGST vs IGST
Under section 7 of the IGST Act, a supply of goods or services is an inter-state supply — taxed under IGST — where the location of the supplier and the place of supply fall in two different states, two different union territories, or a state and a union territory. Section 7(5)(a) extends this to any supply where the supplier is located in India and the place of supply is outside India, and section 7(5)(b) to supplies to or by a Special Economic Zone developer or unit. Section 8 is the mirror rule: an intra-state supply — taxed under CGST plus SGST — is one where the location of the supplier and the place of supply are in the same state or union territory. Both sections open "subject to the provisions of section 10" (goods) or "section 12" (services): place of supply runs first, and the inter-state/intra-state label is only a consequence of it.
Place of Supply of Goods — Sections 10 and 11
For goods that stay inside India, section 10(1) sets five sub-rules. The general rule, section 10(1)(a): where the supply involves movement of goods, the place of supply is the location of the goods when movement terminates for delivery to the recipient — in practice, the delivery address. Section 10(1)(b) covers "bill-to-ship-to" transactions: when goods are delivered to a third person on the buyer's direction, the place of supply is that third person's principal place of business. Where goods are assembled or installed at site, section 10(1)(d) fixes the place of supply as the site of installation; where goods are supplied on board a conveyance, section 10(1)(e) fixes it as the point where the goods are taken on board.
For goods crossing the border, section 11 is a two-line rule: the place of supply of goods imported into India is the location of the importer, and the place of supply of goods exported from India is the location outside India. Combined with section 7(2), imported goods are treated as an inter-state supply until they clear customs frontiers — which is why IGST, not CGST/SGST, is charged at customs clearance.
Place of Supply of Services Inside India — Section 12
Section 12 applies only where both supplier and recipient are located in India. The default rule, section 12(2), is registration-based rather than delivery-based: for a supply made to a registered person, the place of supply is that person's location; for a supply to an unregistered person, it is the recipient's address on record if one exists, and the supplier's location otherwise. Section 12(3) carves out services tied to immovable property — architects, interior decorators, surveyors, engineers, estate agents, hotel and accommodation services, and construction-related work — where the place of supply is fixed to where the property is located, regardless of either party's registration or address.
Cross-Border Services — Section 13
Section 13 takes over whenever the supplier or the recipient is located outside India — the provision that matters most to a foreign company doing business with India, or an Indian company selling abroad.
The Default Rule — Section 13(2)
Section 13(2) states: "The place of supply of services except the services specified in sub-sections (3) to (13) shall be the location of the recipient of services," with a proviso that "where the location of the recipient of services is not available in the ordinary course of business, the place of supply shall be the location of the supplier of services." This is the rule governing most cross-border professional, consulting, IT, and back-office services — the place of supply follows the client, not the vendor.
Performance-Based Services — Section 13(3)
Two categories are pulled out of the default rule and pinned to where the work is physically done. Section 13(3)(a) covers services performed on goods the recipient must make physically available to the supplier — repair, testing, and certification work — with the place of supply being where the service is actually performed (a carve-out exists for goods temporarily imported for repair and re-exported without other use). Section 13(3)(b) covers services requiring the physical presence of the recipient, or someone acting for them, with the supplier — such as personal or on-site services delivered in person.
Immovable Property — Section 13(4)
As with the domestic rule, cross-border services connected directly to immovable property — services by experts and estate agents, hotel and accommodation supply, and construction coordination — have their place of supply fixed to where the property is located or intended to be located, regardless of where the supplier or recipient sits.
Intermediary Services — Section 13(8)(b) Has Been Omitted
Section 13(8) fixes the place of supply at "the location of the supplier of services" for services supplied by a banking company, financial institution or non-banking financial company to account holders (clause (a)) and for hiring means of transport for up to a month (clause (c)). Clause (b), which put intermediary services in that list, has been omitted by section 157 of the Finance Act, 2026, and no longer appears in the CBIC's consolidated text of the IGST Act. Section 2(13) still defines an intermediary as "a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account." An Indian agent who arranges sales for a foreign principal, without buying and reselling on its own account, is still an intermediary. What has changed is the consequence: with clause (b) gone, an intermediary service is no longer pinned to the supplier's own location and falls back to the section 13(2) default, the location of the recipient. The change is prospective: the Finance Act, 2026 received the President's assent on 30 March 2026 and its section 1(2) does not defer section 157, so the omission took effect on that date, and supplies made up to 29 March 2026 remain governed by clause (b). For years that clause was the most litigated place-of-supply question in Indian GST, because it stripped the export rating from transactions that looked like exports on their face; see Non-Resident Taxable Person for how a foreign principal's own registration exposure works.
Online Information and Database Access or Retrieval (OIDAR) — Section 13(12)
Section 13(12) fixes the place of supply of "online information and database access or retrieval services" — defined in section 2(17) as services whose delivery is mediated by information technology over the internet or an electronic network and whose supply is impossible to ensure without information technology, listing internet advertising, cloud services, e-books, music, films and software supplied online, digital data storage and online gaming other than online money gaming — at "the location of the recipient of services." The Finance Act, 2023 removed the earlier requirement that such a supply be "essentially automated and involving minimal human intervention," with effect from 1 October 2023, which widened the category. A foreign SaaS or streaming company selling to unregistered customers in India has its place of supply in India on those sales, which is why such suppliers take an Indian GST registration under the Simplified Registration Scheme in section 14 and charge tax on India-facing subscriptions rather than treat the sale as an export from their home country.
Export of Services — The Section 2(6) Conditions
Place of supply is only one of five conditions a service must clear to be an "export of services" under section 2(6) of the IGST Act, and therefore zero-rated. All five apply together: (i) the supplier of service is located in India; (ii) the recipient of service is located outside India; (iii) the place of supply of the service is outside India; (iv) payment has been received by the supplier in convertible foreign exchange, or in Indian rupees wherever the Reserve Bank of India permits; and (v) the supplier and recipient are not merely establishments of a distinct person under Explanation 1 to section 8. A transaction can fail on condition (iii) alone — foreign-currency payment does not rescue a supply whose place of supply, under section 13, is fixed in India.
Why This Matters for a Foreign Company or Investor
- India-based exporters — an Indian subsidiary or vendor billing an overseas client for services that fall under the section 13(2) default (most consulting, software development, and back-office work performed remotely) can usually invoice as a zero-rated export of services, subject to the section 2(6) conditions, supplying under a bond or Letter of Undertaking and claiming a refund of unutilised input tax credit under section 16(3) of the IGST Act.
- Foreign digital suppliers — a company selling OIDAR services (apps, streaming, cloud tools, downloadable content) to recipients in India has its place of supply in India under section 13(12). Where the recipient is a "non-taxable online recipient" — since 1 October 2023, any unregistered person in the taxable territory, including one registered only to deduct tax at source — section 14 makes the overseas supplier liable for the tax under a single Simplified Registration. A sale to a registered Indian business is taxed in that business's hands under reverse charge instead.
- Agents and distributors — commission earned by an Indian agent that arranges sales for a foreign principal is no longer fixed in India by section 13(8)(b), which has been omitted. Its place of supply now follows the section 13(2) default, the location of the recipient, so the commission can clear the place-of-supply condition for export of services provided the other section 2(6) conditions are met.
- On-site and property-linked work — sending consultants to physically inspect goods or property in India, or contracting for India-based construction or accommodation services, fixes the place of supply in India under sections 13(3) and 13(4) even where the client is entirely overseas.
Worked Example
A US-based fintech engages an Indian software company to build a mobile application entirely offshore, with no goods made physically available and no Indian site visit required. Under section 13(2), the place of supply is the location of the recipient — the United States. If payment arrives in US dollars and the two companies are not establishments of a single distinct person, all five section 2(6) conditions are met: the invoice is a zero-rated export of services, and the Indian company can bill without charging GST under a Letter of Undertaking, or claim a refund of unutilised input credit.
Contrast this with the same US fintech instead hiring an Indian firm to find and sign up Indian merchants on its behalf, paying it a commission per merchant signed. That Indian firm is an intermediary under section 2(13). Until section 13(8)(b) was omitted by the Finance Act, 2026, its place of supply was fixed at its own location in India and the commission could not be an export however it was paid. With that clause gone, the commission falls under the section 13(2) default, its place of supply is the recipient's location in the United States, and the section 2(6) test turns on the remaining four conditions rather than on place of supply.
Frequently Asked Questions
Does place of supply depend on where the invoice is raised or where the payment is sent from?
No. Place of supply under sections 10-13 of the IGST Act looks at the location of the goods, the recipient, the property, or the performance of the service — never at where the invoice is issued or which bank account the payment clears through. Foreign-currency payment is a separate condition, under section 2(6)(iv), for export status, not a substitute for place of supply.
Can an Indian IT exporter lose export status even if paid in US dollars?
Yes. Section 2(6) requires all five conditions together, including that the place of supply is outside India. If the work falls under a performance-based carve-out in section 13(3), or the immovable-property rule in section 13(4), and the place of supply lands back in India, dollar payment alone does not qualify the supply as an export.
Why does a foreign SaaS company need an Indian GST registration if it has no office in India?
Because section 13(12) fixes the place of supply of OIDAR services at the recipient's location. Where those customers are unregistered persons in India, they are “non-taxable online recipients” under section 2(16), and section 14 makes the overseas supplier liable for the tax under a single Simplified Registration. A sale to a registered Indian business is taxed in that business's hands under reverse charge instead.
Is a commission paid to an Indian sales agent by a foreign parent an export of services?
It can be. The agent is still an intermediary under section 2(13), but section 13(8)(b), which used to fix an intermediary's place of supply at its own location in India, has been omitted by section 157 of the Finance Act, 2026. The place of supply now follows the section 13(2) default, the location of the recipient, so the commission can qualify as an export of services if the other four conditions in section 2(6) are met.
What is the difference between "location of supplier" and "place of supply"?
"Location of supplier" (section 2(15)) and "location of recipient" (section 2(14)) identify where each party's registered place of business, fixed establishment, or usual residence sits. "Place of supply" is a separate, transaction-specific rule under sections 10-13 that can point to either party's location, a physical performance site, or a property's location, depending on which sub-rule applies.
See also: Goods and Services Tax (GST), Reverse Charge Mechanism, and Non-Resident Taxable Person (NRTP).