What is Place of Supply?
Place of supply is the GST rule that decides where a supply is treated as happening. It determines whether a supply is intra-state (CGST plus SGST), inter-state (IGST) or outside India. For cross-border services, the rules are in Section 13 of the IGST Act. The default rule is generally the location of the service recipient, but there are important exceptions.
Why it matters for exporters
One of the five conditions for an export of services under Section 2(6) of the IGST Act is that the place of supply is outside India. If it falls in India, the supply is not an export for GST, even if the client is abroad and pays in dollars. You would then need to charge GST as on a domestic supply, and an LUT would not help.
Exceptions in Section 13 that commonly trip up exporters include services performed on goods physically made available in India, services tied to immovable property in India, services connected with events held in India, and intermediary services, where the place of supply is generally the supplier's location. The specific rules have nuances, so check them with your CA. Read place of supply for export of services for the main cases. This is general information, not tax advice.
Example
Two firms in Gurugram bill US clients USD 6,000 each. Willowmark Design creates brand guidelines delivered online, so the place of supply is the US client's location, and it invoices under LUT. Bridgeway Associates arranges Indian vendors for a US buyer and is paid a commission for introducing them. Its CA flags this as a likely intermediary service with the place of supply in India, so GST applies.
Common confusion
Place of supply is a GST concept and does not change the EDF. FEMA reporting turns on whether you exported a service and received foreign payment. See intermediary services for the most common trap.