Short answer: For most B2B services, place of supply (PoS) is the location of the recipient — not where the service is performed or where your office sits (IGST Act 2017, s.12(2)). If your registered state (GSTIN state) equals the PoS state, charge CGST + SGST (CGST Act 2017, s.8). If they differ, charge IGST. Getting PoS wrong means wrong tax type, wrong GSTR-1 filing, and ITC mismatches that can trigger demand notices.

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What Is Place of Supply — and Why It Matters for Service Companies

Place of supply is the state whose tax applies to a transaction. For service companies — SaaS, consulting, IT, design, staffing, marketing agencies — PoS determines whether you invoice IGST (inter-state) or CGST + SGST (intra-state).

PoS is not about where you deliver the service, where your team works, or where the contract was signed. It is a statutory rule that pins tax to a specific state. Service companies with clients across India file under multiple tax types in the same month — one invoice may be IGST, the next CGST+SGST, depending on each recipient's registered state.

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The B2B Default Rule: Recipient Location Wins

For B2B supplies where the recipient is registered under GST, the default rule is straightforward — and widely misapplied.

What s.12(2) actually says: PoS is the location of the recipient of services.

This applies to the majority of B2B service supplies:

• Software development billed to a client in another state
• Consulting fees to a company registered in a different state
• Annual maintenance contracts (AMC)
• Digital marketing services
• HR and payroll outsourcing
• Cloud hosting and SaaS subscriptions

Trap #1: Most Articles Get This Wrong

Many guides state PoS is where the service is "performed" or "delivered." That is incorrect for the default B2B rule. A Bangalore-based IT firm billing a Mumbai-registered client performs work in Bangalore — but PoS is Mumbai (recipient location), not Karnataka (supplier state). The invoice must show IGST, not CGST+SGST.

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Service-Specific Overrides: IF/THEN Table

Section 12(2) is the default. Specific service categories override it. Use this table before invoicing.

Trap #2: Immovable Property Override

IGST Act 2017, s.12(3) overrides the recipient-location rule entirely. PoS is where the property sits — regardless of supplier or recipient state.

Affected firms: architects, interior designers, construction management companies, property surveyors, facilities managers tied to a specific site.

Trap #3: "Same State" Means GSTIN State, Not Office Location

A company with offices in Bangalore, Mumbai, and Delhi holds three separate GSTINs. "Same state" for PoS and tax-type purposes means the GSTIN registered state under which that specific supply is made — not where staff sit or work happens.

Using the wrong GSTIN for a supply can change the tax type and create reconciliation gaps in GSTR-1 and GSTR-3B.

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The IGST vs CGST+SGST Test

Once PoS is fixed, tax type follows mechanically.

Step-by-step for every B2B invoice

• Identify service type — default B2B, immovable property, restaurant, or B2C.
• Apply override if applicable — s.12(3) or s.12(4); otherwise s.12(2).
• Determine PoS state — recipient location, property location, or performance location per table above.
• Match supplier GSTIN state to PoS state — equal → CGST+SGST; unequal → IGST.
• Issue invoice with correct tax type and file in correct GSTR-1 table.

Trap #4: Wrong Tax Type = Wrong Return, ITC Mismatch, Demand Risk

Charging CGST+SGST when IGST applies (or vice versa) causes:

• Wrong GSTR-1 table — inter-state supplies in the wrong section
• Recipient ITC mismatch — client cannot claim IGST if you charged CGST+SGST
• Reconciliation failures — GSTR-2A/2B won't match client books
• Demand notices — tax authority may raise demand for differential tax plus interest

The supplier state vs PoS test is not optional. It is the step that converts a correct PoS into the correct tax lines on the invoice.

Trap #5: Unregistered Recipient (B2C)

When the recipient is not registered and their location is not known, PoS defaults to the supplier's location (IGST Act 2017, s.12(2)). For B2B service companies this arises with small unregistered businesses, individuals, and overseas clients where Indian state cannot be determined. Document why recipient location was unknown — audit trail matters.

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Common Mistakes and Their Consequences

Real-world pattern: A SaaS company in Bangalore bills all clients CGST+SGST because "we operate from Karnataka." Clients in Maharashtra, Delhi, and Gujarat cannot claim IGST. GSTR-2B mismatches surface at year-end. Rectification requires credit/debit notes and client cooperation — costly and slow.

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Frequently Asked Questions

1. We are a Bangalore company but all work is done remotely. Where is PoS for our B2B clients?

PoS is the location of each recipient, not where your team works (IGST Act 2017, s.12(2)). A Mumbai-registered client → PoS Maharashtra → IGST from your Karnataka GSTIN. A Karnataka-registered client → PoS Karnataka → CGST+SGST.

2. Our client has offices in three states. Which state is the recipient location?

The state on the client's GSTIN for that supply. B2B PoS follows the registered location of the recipient entity invoiced. If the client issues PO under Maharashtra GSTIN, PoS is Maharashtra — even if users or project staff sit elsewhere.

3. We provide interior design services. Is PoS the client's office state or ours?

Property location under s.12(3) — not client office state, not your office state. Design services for a property in Hyderabad → PoS Telangana, regardless of where either party is registered.

4. What if we charged the wrong tax type but the PoS was correct?

PoS may be right but tax type wrong if you skipped the supplier-state test. Issue a credit note for the incorrect invoice and re-issue with correct CGST+SGST or IGST. Client needs corrected invoice to claim ITC. Do not leave mismatches across GSTR-1 and client GSTR-2B.

5. Does PoS change for export of services?

Export of services is treated as zero-rated under IGST Act 2017, s.13 — outside the s.12(2) B2B default for domestic supplies. PoS rules in this article apply to domestic B2B and B2C supplies. Cross-border exports need separate analysis under s.13.

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Determine PoS Before You Invoice

Manual PoS decisions across dozens of monthly invoices invite the errors above. Use the step logic: service type → override check → PoS state → supplier GSTIN state comparison → tax type.

GST Place of Supply Calculator →

Enter supplier GSTIN state, recipient state, and service type. Get PoS, tax type (IGST or CGST+SGST), and applicable statute section — before you raise the invoice.

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Reviewed by CA Harun Raaj, ICAI Membership No. 238303. Statute: IGST Act 2017 ss.7, 8, 10-14. Last verified: 2026-08-05.

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