Glossary GST
Place of supply
Definition
Place of supply is the state where GST treats a supply as made; compared with the supplier's location, it decides IGST or CGST plus SGST.
Example
An Ahmedabad trader sells tiles worth ₹3,00,000 at 18% to a Mumbai buyer and delivers them in Mumbai. The place of supply is Maharashtra, so the invoice carries IGST ₹54,000. If the Mumbai buyer collects the tiles at the Ahmedabad godown instead, the place of supply is Gujarat and the bill carries CGST ₹27,000 and SGST ₹27,000.
Place of supply in TallyPrime and in Cashflow OS
Where to find itIn TallyPrime
TallyPrime takes the place of supply from the party's state in the ledger and lets you change it on a voucher when delivery is elsewhere. It then applies CGST/SGST or IGST ledgers accordingly.
On your phoneIn Cashflow OS
When a voucher is created from the phone or web in Cashflow OS, GST is worked out from the item and the party's state, and Tally validates the entry when it is posted.
See how it works
Common misunderstandings
- Watch outUsing the buyer's billing address when goods are delivered in a different state.
- Watch outFixing a wrong tax type with a journal. Pay the correct tax and claim a refund of the wrong one.
Why it matters
If the supplier's location and the place of supply are in the same state, the supply is intra-state and attracts CGST and SGST. If they are in different states, it is inter-state and attracts IGST. Getting this wrong means paying the wrong tax. The tax paid under the wrong head has to be paid again under the right one and a refund claimed for the first, so the mistake is costly to undo. See IGST vs CGST and SGST.
The basic rules
- Goods that move: where the movement ends, that is, where they are delivered to the buyer.
- Bill-to ship-to: where goods are delivered on the direction of a third person, the place of supply is the principal place of business of the person who directed it (the bill-to party).
- Goods that do not move: where they are at the time of delivery, such as goods installed on site.
- Services, general rule: the recipient's location if registered; otherwise their address on record, or the supplier's location.
- Specific services such as those related to property, events, transport and restaurants have their own rules.
Our guide on place of supply for goods covers the goods cases in detail.
Example
A Jaipur wholesaler sells sanitaryware worth ₹2,00,000 at 18% GST.
| Buyer and delivery | Place of supply | Tax |
|---|---|---|
| Buyer in Ajmer, delivered in Ajmer | Rajasthan | CGST ₹18,000 + SGST ₹18,000 |
| Buyer in Indore, delivered in Indore | Madhya Pradesh | IGST ₹36,000 |
| Buyer from Indore collects at the Jaipur counter | Rajasthan | CGST + SGST |
The last row surprises people: movement ends in Jaipur, so it is intra-state even though the buyer is from another state.
Where it shows up in TallyPrime
TallyPrime takes the place of supply from the party's state in the ledger, and you can change it on a voucher when the delivery address differs. It then picks CGST/SGST or IGST ledgers. Check the state on every party ledger, and look at the place of supply field on any sale where goods are delivered somewhere other than the billing address.
This is general information, not tax advice.
Related terms
Questions about Place of supply
Is place of supply the same as the buyer's address?
What if I charged CGST and SGST instead of IGST?
Does the place of supply appear on the invoice?
What is the place of supply for a bill-to ship-to sale?
Does a wrong place of supply affect the buyer?
This page is general information for Indian businesses, not tax, legal or financial advice. Rules and rates change — check the official portals or your CA before acting.
