Place of supply in GST is the location where a sale is treated as being supplied — and it is the single thing that decides whether you charge CGST + SGST or IGST on a bill. For goods that move, the place of supply is generally where the movement of goods ends for delivery to the buyer. This guide explains what place of supply means for a small shop, how to work it out for goods, and shows a worked example with two states so the tax routing is clear.
Why place of supply matters
GST is a destination-based tax — the tax belongs to the state where goods are consumed, not where they are sold from. So the law needs one rule to decide which state a sale belongs to. That rule is the place of supply, and it drives the tax split:
- Same state (intra-state): your state == the place of supply → charge CGST + SGST, each at half the rate.
- Different state (inter-state): your state ≠ the place of supply → charge a single IGST at the full rate.
If you pick the wrong one, the buyer may lose input tax credit and your returns can mismatch at filing time. For how the CGST/SGST/IGST split itself works, see our guide to the difference between CGST, SGST and IGST.
How to find the place of supply for goods
For domestic sales of goods, the rules sit in Section 10 of the IGST Act (see the official Act on cbic.gov.in). The common situations a shop meets are:
| Situation | Place of supply |
|---|---|
| Goods move to the buyer (delivery / courier) | Where the movement of goods ends for delivery |
| Buyer carries the goods away (no movement by you) | Location of the goods at the time of the sale — i.e. your shop |
| Goods installed or assembled at a site | The installation/assembly site |
| Bill-to / ship-to (billed to one party, shipped to another) | Treated as supplied to the party billed — confirm the current rule with your CA |
For the everyday counter sale, this is simple: if the customer walks out with the goods, the place of supply is your shop. If you deliver, the place of supply is the delivery address.
Place of supply for a walk-in (B2C) sale
Most kirana and retail sales are to unregistered buyers with no GSTIN. For these:
- If the customer takes the goods at the counter, place of supply = your shop’s state → an intra-state sale (CGST + SGST).
- If you deliver to another state, place of supply = the delivery state → an inter-state sale (IGST).
You do not need the buyer’s GSTIN for a normal walk-in sale, but you should still know the place of supply, because it decides the tax lines on the bill.
A worked example (two states)
Meena runs a hardware store in Madurai, Tamil Nadu (state code 33). She sells ₹5,000 of goods taxed at 18%.
Case 1 — customer in Tamil Nadu. The goods are delivered within Tamil Nadu, so the place of supply is Tamil Nadu (33) — the same as her state. It’s intra-state:
- CGST 9% = ₹450
- SGST 9% = ₹450
- Invoice total = ₹5,000 + ₹450 + ₹450 = ₹5,900
Case 2 — same goods shipped to Kochi, Kerala (state code 32). Now the movement ends in Kerala, so the place of supply is Kerala — a different state. It’s inter-state:
- IGST 18% = ₹900
- Invoice total = ₹5,000 + ₹900 = ₹5,900
Notice the total is identical (₹5,900) — only the split changed. That’s the whole point of place of supply: same tax, routed to the right state.
Quick reference
| Your state vs place of supply | Type | Tax charged |
|---|---|---|
| Same | Intra-state | CGST + SGST (half each) |
| Different | Inter-state | IGST (full rate) |
Two-digit state codes (the first two digits of a GSTIN — e.g. 33 = Tamil Nadu,
32 = Kerala, 29 = Karnataka) are how software compares your state with the place of
supply automatically.
Letting software get this right every time
Working out the place of supply and the correct CGST/SGST/IGST split on every bill, by hand, across many tax rates, is exactly where small shops lose time and make mistakes.
Yojika is offline-first GST billing software built for Indian small shops. It reads the place of supply from the buyer’s state, applies CGST + SGST or IGST automatically, and prints to A4, A5, or a thermal receipt printer — with invoices in all 22 official Indian languages. Your business data stays on your own PC.
- See what’s included on the features page.
- Or download Yojika and try it free for 14 days.
This article is general information, not tax advice. GST rules and thresholds change — confirm the current position on gst.gov.in or with your CA.