Every taxable supply under GST is either intra-state or inter-state. Intra-state supplies carry two taxes, CGST and SGST, each at half the rate. Inter-state supplies carry one, IGST, at the full rate. Getting this wrong does not usually change what your customer pays — it changes which government gets it, and whether your customer can claim the input tax credit at all.
The rule, in one line
Compare your own state — the state in your GSTIN — against the place of supply on the document. Same state, it splits into CGST and SGST. Different states, it is all IGST.
The mistake almost everyone makes
The comparison is against the place of supply, not the customer's billing address, and not where their head office is registered. Those are three different things and they disagree more often than you would expect.
A Delhi company orders material delivered to their Ludhiana site. You are in Punjab. Their billing address says Delhi, so the instinct is IGST — but the goods stop moving in Punjab, so the place of supply is Punjab, your state, and the correct answer is CGST and SGST. Bill it as IGST and your customer's credit claim does not match the return you filed.
Working out the place of supply
These are the everyday cases. They cover most small-business billing.
Goods that move
The place of supply is where the movement of the goods ends for delivery to the recipient. Where you dispatched from does not enter into it.
Goods handed over on the spot
Someone walks into your shop and carries the goods out. There is no movement to speak of, so the place of supply is your own premises — an intra-state supply, CGST and SGST, whatever address the customer gives you.
Services to a registered customer
The place of supply is the location of that registered person, which you take from their GSTIN.
Services to an unregistered customer
The place of supply is the address on your record for them. If you hold no address at all, it falls back to your own location.
Cases with their own rules
Work connected to immovable property — construction, interior work, an architect's fee — is placed where the property is, no matter where either party sits. Events, transport of goods and passengers, training, restaurant and telecom services also have their own provisions, and exports are a separate case again. If your billing runs on one of those, check the specific rule or ask your accountant rather than applying the general one above.
What the split looks like
Take a line of ₹10,000 taxable value at 18%. The tax is ₹1,800 either way; only the heads change.
| You are in | Place of supply | Heads on the invoice | Tax |
|---|---|---|---|
| Punjab | Punjab | CGST 9% + SGST 9% | ₹900 + ₹900 |
| Punjab | Haryana | IGST 18% | ₹1,800 |
| Chandigarh | Chandigarh | CGST 9% + UTGST 9% | ₹900 + ₹900 |
The customer pays ₹11,800 in all three. What differs is which government collects it and which head your customer claims credit under — which is exactly why a wrong split is worth catching before the return is filed rather than after.
The union territory case
In a union territory without its own legislature — Chandigarh, Ladakh, the Andaman and Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli and Daman and Diu — an intra-territory supply carries UTGST in place of SGST. The arithmetic is identical, half and half; only the name of the head changes.
Delhi, Puducherry and Jammu and Kashmir have legislatures of their own, so supplies within them carry ordinary SGST. This trips people up because all three are commonly called union territories in every other context.
Two things that do not change the answer
- Whether your customer is registered. An unregistered customer still has a place of supply, and the split is worked out the same way. It changes which table of your GSTR-1 the invoice lands in, not the tax heads.
- Where you happen to be standing. The comparison uses the state in your GSTIN — your place of business — not where you were when you raised the bill.
How BahiSathi handles it
You pick the place of supply on the document and nothing else is asked of you. The app reads your state from your GSTIN, compares the two, and applies CGST and SGST, CGST and UTGST, or IGST accordingly — per line, so a bill carrying items at 5%, 12% and 18% splits each one correctly.
Because the split is derived rather than typed, an invoice cannot end up with IGST and CGST on it at once, and the two halves of an intra-state tax cannot disagree by a paisa on an odd amount. The same engine runs in the Android app, the web app and on our server, checked against one shared set of test vectors, so all three always agree.
This page explains the general rule and is not a substitute for advice from your accountant on a specific transaction.