IGST or CGST and SGST? How the place of supply of goods decides

Charging the wrong tax head is one of the most common reasons a GSTR-1 line is rejected. The decision depends on two states: yours, and the place of supply.

The basic rule for goods that move

Under Section 10(1)(a) of the IGST Act, when a supply involves movement of goods, the place of supply is where the goods are when the movement ends, on delivery to the recipient. If that is your own state, charge CGST and SGST. If it is another state, charge IGST.

When someone else tells you where to deliver

In a bill-to ship-to arrangement, a buyer directs you to deliver the goods to another person. Section 10(1)(b) treats the directing buyer as having received the goods, so the place of supply for that invoice is that buyer's principal place of business, and the delivery location does not decide it. The delivery leg is looked at separately.

• Delhi supplier, buyer in Maharashtra directs delivery to the buyer's customer in Delhi: the place of supply on the Delhi invoice is Maharashtra, so IGST.
• The same goods, buyer in Delhi: CGST and SGST.

Other cases to remember

• Union territories without a legislature charge UTGST instead of SGST on supplies within the territory.
• Exports and supplies to an SEZ are charged IGST.
• Services have their own place-of-supply rules in sections 12 and 13, and a recent clause covers supplies to unregistered persons, so don't use this test for services.

The IGST or CGST + SGST checker applies the basic rule to two states you choose. For bill-to ship-to cases, decide the place of supply first.