GST Place of Supply: Imports and Exports Explained

1. Introduction

When India moved to the Goods and Services Tax (GST) system, one of its biggest goals was to unify taxation for all kinds of supplies — whether made inside the country or across borders.

For domestic supplies, Section 10 of the IGST Act explains the place of supply. But what about international trade — imports and exports of goods?

That’s where Section 11 of the Integrated Goods and Services Tax (IGST) Act, 2017 comes in. It tells us how to determine the place of supply for goods that either enter India (imports) or leave India (exports).

Let’s understand this important section step-by-step with clear examples, simple language, and the latest updates.

2. What Section 11 Says

Section 11 of the IGST Act provides two clear rules:

• Import of Goods — The place of supply shall be the location of the importer.
• Export of Goods — The place of supply shall be the location outside India where goods are sent.

In simple terms:

3. Why This Rule Matters

GST is designed as a destination-based tax, meaning the State or country where goods are consumed should get the tax revenue.

So —

• For imports, the goods are consumed in India → tax collected here.
• For exports, the goods are consumed outside India → no GST charged (domestic zero-rating).

Without Section 11, we wouldn’t know which jurisdiction (India or foreign) is entitled to the tax revenue.

4. Rule 1 – Place of Supply for Imports of Goods

When goods enter India from a foreign country, customs handles taxation at the border.

Legal Provision

That means the import is treated as taking place in the State or Union Territory where the importer is registered.

How GST Applies

• Imports attract Integrated GST (IGST) under Section 3(7) of the Customs Tariff Act in addition to Basic Customs Duty (BCD).
• IGST is collected at the time of import (customs clearance).
• The importer can claim input tax credit (ITC) for the IGST paid if the goods are used for taxable business.

Example 1 – Import of Machinery

ABC Industries Pvt. Ltd., registered in Gurugram (Haryana), imports a packaging machine from Germany through Nhava Sheva Port (Maharashtra).

• Importer location: Haryana
• Port of entry: Maharashtra

✅ Place of Supply = Haryana (location of importer)

✅ Tax Type = IGST on Import (levied at Customs)

Even though the machine lands at Maharashtra, GST considers the supply to have occurred in Haryana — the importer’s State.

Example 2 – Import by Branch Office

Global Chem Ltd. (Mumbai) imports chemicals from Singapore, but delivery is directly to its factory in Gujarat.

• Importer location = Maharashtra
• Place of Supply = Maharashtra (registered importer State)

The warehouse or delivery site does not change the place of supply — it always stays with the importer’s registered location.

Example 3 – Import for Personal Use

Mr. Arun (based in Delhi) imports a laptop for personal use from the U.S.

• Place of Supply = Delhi
• Tax Type = IGST collected by Customs

Because it’s for personal use, Arun can’t claim ITC — but the tax is still paid as IGST.

5. Rule 2 – Place of Supply for Exports of Goods

Exports are simpler — they are always treated as supplies outside India.

Legal Provision

That means goods leaving Indian territory are considered inter-State supplies, but taxed at zero rate under Section 16 of the IGST Act.

Zero-Rated Concept

“Zero-rated” means:

• No GST charged on exports.
• Exporter can claim refund of input tax credit (ITC) or IGST paid on export.

This encourages Indian exports by making them tax-neutral internationally.

Example 4 – Export of Textiles

Textile World Ltd. (Tiruppur, Tamil Nadu) exports garments to France.

• Place of Supply = Outside India (France)
• Tax = Zero-rated (IGST at 0%)

The exporter can either export under bond or LUT without paying IGST and claim refund of ITC, or pay IGST and claim refund afterward.

Example 5 – Export via Third Party

ABC Exports Ltd. (Kolkata) ships tea to London for a U.S. buyer (Boston Importers LLC).

• Place of Supply = Outside India (London)
• Tax Treatment = Zero-rated Export

Even though payment comes from the U.S., the physical movement of goods is to the U.K. — and that’s what decides the PoS under Section 11.

Example 6 – High-Seas Sales

Sometimes, an Indian buyer purchases goods from a foreign supplier before they reach India and then sells them to another buyer before customs clearance — this is called a high-seas sale.

• Such sales are neither import nor export under GST (tax collected only when goods finally enter India and are cleared for home use).
• Once cleared, the place of supply = importer’s location as per Section 11(a).

6. Relationship with Customs Law

Section 11 works closely with the Customs Act and Tariff Act.

7. Documentation for Imports and Exports

For Imports

• Bill of Entry showing IGST paid.
• Import invoice & packing list.
• Shipping bill / Airway bill.
• GST invoice (if sold domestically after import).

For Exports

• Export invoice (0% IGST).
• Shipping bill / bill of lading.
• LUT or bond copy.
• Bank realisation certificate (BRC / FIRC) for foreign payment.
• E-way bill (if required within India till port).

Proper documentation is crucial for claiming refunds and avoiding disputes on PoS.

8. Latest Updates and Clarifications (2024–25)

These changes make cross-border compliance easier and reduce refund processing time.

9. Common Errors to Avoid

• Treating import delivery State as PoS instead of importer’s location.
• Missing LUT for zero-rated export and paying unnecessary IGST.
• Delay in filing shipping bills → refund denied.
• Not matching customs IGST data with GST returns (GSTR-2B).
• Using wrong HSN code for exported goods.

10. Comparison of Import and Export Rules

11. Interaction with Other Provisions

• Imports: Treated as supply under Section 7(2) of IGST Act even if not for business.
• Exports: Must fulfil Section 2(5) definition — goods must leave India and payment received in convertible foreign exchange or as per RBI rules.
• High-Sea Sales & Bonded Warehouses: Exempt until goods enter domestic consumption area.

12. Case Study: Import vs Export

Case 1 – Import of Solar Panels

SunPower India Ltd. (Bengaluru) imports solar panels from China via Chennai Port.

• PoS = Bengaluru (Karnataka)
• IGST collected at Chennai Customs and available as ITC.

Case 2 – Export of Pharmaceuticals

HealthCure Ltd. (Mumbai) exports medicine to Kenya.

• PoS = Outside India (Kenya)
• Supply = Zero-rated → Refund of input credit claimed.

13. Practical Checklist for Businesses

• Ensure importer’s GSTIN State matches Bill of Entry.
• For exports, link invoice and shipping bill accurately (GSTR-1 vs ICEGATE).
• File LUT annually to avoid paying IGST on exports.
• Verify HSN and value with customs data.
• Track IGST refunds through ICEGATE portal.
• Keep proof of foreign payment (BRC/FIRC).

14. Simplified Flow Chart

Imports → Goods enter India → IGST levied at customs → PoS = importer location → ITC claim

Exports → Goods leave India → Zero-rated → PoS = outside India → Refund eligible

15. Key Takeaways

• Section 11 handles place of supply for cross-border transactions.
• Imports: PoS = importer’s location; IGST paid at customs.
• Exports: PoS = destination outside India; zero-rated supply.
• IGST on imports is credit-eligible; exports are tax-free with refund of ITC.
• Accurate records and timely returns ensure smooth refund and credit flow.

16. Quick Recap Table

17. Final Thoughts

Section 11 of the IGST Act bridges India’s domestic GST with international trade practices. It ensures tax is collected where goods are consumed — India for imports and foreign destinations for exports.

For businesses, this means:

Whether you’re importing raw materials or exporting finished products, understanding Section 11 is the key to seamless GST compliance and cash-flow management.

Also Read: GST Place of Supply: Goods Sold On Board Conveyance