Under GST, every supply transaction requires a determination of Place of Supply (PoS) — because PoS determines which type of tax applies: if the supplier and recipient are in the same state and the PoS is that state = CGST + SGST. If cross-state or the PoS falls in a different state = IGST. Getting this wrong — charging CGST+SGST on what should be an IGST transaction — means the supplier pays the wrong tax to the wrong government, and the buyer receives an ITC credit in the wrong bucket. Both parties are exposed to demands.
Section 12 & 13, IGST Act 2017 — Place of Supply for Services
Section 12 (B2B, both in India): PoS is the location of the recipient. Section 13 (cross-border/B2C/unregistered): Specific rules apply for each type of service — performance-based services (PoS = location of performance), immovable property services (PoS = location of the property), digital services (PoS = location of recipient), intermediary services (PoS = location of supplier).
Statutory Reference
High-Risk Place of Supply Scenarios
Software/IT Services (B2B)
PoS = location of recipient GSTIN. If your Mumbai client gives you a Delhi GSTIN as the billing GSTIN, you must charge IGST even if you are both in the same economic zone. Many small IT firms charge SGST on habit and create ITC mismatches.
Training/Conference Services
PoS = location where the event is actually held, NOT location of recipient. A Bengaluru company hosting a training in Chennai must charge Tamil Nadu SGST (or IGST if cross-state billed), not Karnataka SGST.
Intermediary/Commission Agents
PoS = location of the supplier (not recipient). Counter-intuitive but critical — a Delhi commission agent arranging a deal for a Mumbai client must charge Delhi SGST/CGST, not IGST. Most intermediaries get this wrong.
The intermediary PoS rule is the most consistently misapplied rule in GST for service businesses. Charging IGST where CGST+SGST is required means the state government does not receive its tax, and the AO at the next audit will demand the differential with interest.
— Sami Tax GST Advisory, 2024
Building a PoS Policy for Your Service Business
- Map every service type your business provides to its applicable PoS rule under Sections 12/13 of the IGST Act.
- Build this into your billing system as a configuration rule — not a case-by-case decision.
- For each B2B invoice, your billing software should capture the recipient's registered GSTIN and automatically trigger the correct IGST vs.
- CGST+SGST selection.
- For export of services (recipient outside India): PoS rules under Section 13 have nuances for digital services and intermediary arrangements — consult before billing, not after.
- If you have been applying the wrong PoS rule historically (and many businesses have): a targeted GSTR-3B amendment and credit note cycle can correct past returns.
- Our GST advisory team performs PoS audits as a standalone engagement for service businesses.
- In our experience, 60% of service companies we audit have at least one systematic PoS misapplication.