# Place of Supply — Overview
## Why determine place of supply?
GST is a destination-based tax. The place of supply (POS) determines whether a supply is intra-State (CGST + SGST) or inter-State (IGST) — and therefore which tax flows to which State.
## Quick refresher — how Input Tax Credit (ITC) flows
GST is a value-added tax: at every stage, the supplier pays GST on the value added, by setting off ITC already paid on inputs.
Example: A buys leather + services worth ₹ 6,00,000 from Supplier A (GST @ 18% = ₹ 1,08,000), then supplies finished shoes worth ₹ 10,00,000 to a consumer (GST @ 18% = ₹ 1,80,000).
| Step | Amount |
|---|---|
| Output tax liability (on ₹ 10,00,000 @ 18%) | ₹ 1,80,000 |
| Less: ITC on inputs (₹ 1,08,000 already paid by Supplier A) | (₹ 1,08,000) |
| Net tax payable in cash | ₹ 72,000 |
Government ultimately collects ₹ 1,80,000 (₹ 1,08,000 + ₹ 72,000) — exactly 18% on the final consumer value. POS decides which State receives this.
## Map of POS provisions
| Nature | Goods | Services |
|---|---|---|
| Import / Export | Section 11 (not in syllabus) | Section 13 (not in syllabus, when one party outside India) |
| Domestic (both parties in India) | Section 10 | Section 12 |
| Inter-State definition | Section 7 of IGST Act | Section 7 |
| Intra-State definition | Section 8 of IGST Act | Section 8 |